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Achieving Competitive TalentAdvantage Strategies
• Align talent with business strategy– acquire, retain and manage talent
• Design world-class talent programs– assessment and selection, performance management,
outlining career path, pay and benefits and competency
modeling
• Implement effectively– employment branding, HR service excellence, utilize
technology and change management
• Measure effectiveness over time– establishing business metrics, price of implementation failure,
track and monitor ongoing effectivenessSource: Mercer Human Resource Consulting
Successful Talent Management Evidence
• Managing performance to deliver results– identifying and creating goals for employees to evaluate financial,
strategic and personal objectives
– linking individual incentives to measures of company-wide success
• Motivating talented people– linking career paths, job levels, roles, responsibilities, and
competencies across all functions
• Staffing operations in a new overseas market– creation of employment brand
• Identifying business risks using human capitalstrategies– identification of elements that create too frequent lateral movements
Source: Mercer Human Resource Consulting
Talent Management – a Risky Business Ensuring Management Commitment
• Stakeholder buy in is required
• Value and impact of the strategy needs to becommunicated and reinforced regularly
• Link talent strategy to the bottom line anddemonstrate its financial value
• Clear objectives about the expectation of theorganization
• Continuous evaluation, revisiting and realigning
Source: Aon Risk Bulletin
Future of Talent Management
• At present, recruiting and keeping talentedemployees is a priority
• In the long-run, performance of the entireworkforce will differentiate an organization
• Companies which tap into the talent in all their staffwill excel in the long-run
Source: Aon Risk Bulletin
Best Performing Industriesin the U.S.
Top Five, 2006
Financial Services
Manufacturing
Health Care
Professional & Business Services
Leisure & Hospitality
Source: Training Magazine
Employee Turnover in the U.S.
By Industry, 1990-2003
Source: US Department of Labor
56%
52%
35%
22%
20%
20%
19%
17%
16%
14%
23%
Accommodation & Food Services
Leisure & Hospitality
Retail Trade
Information
Real Estate, Rental, Leasing
Health Care & Social Assistance
Education & Health Services
Manufacturing
Financial Activities
Educational Services
Total U.S.
Top Five Companies
By Workforce Training, 2006
Rank Firms
1 Ritz Carlton Hotel Company2 Pricewaterhouse Coopers
3 EMC Corporation4 Verizon wireles
5 General Mills
Source: Training Magazine
Gross Domestic Expenditure on R&D 1981-2006
Sources: OECD, Main Science and Technology Indicators
200520021999199619931990198719841981
350
300
250
200
150
100
50
0
Billions Current PPP $
ChinaEU-15GermanyJapanUnited States
Level of Education in the U.S.
By Degree Type, 2002
17% Bacheloronly
Non-High School,
16%
High School, 33%
Some College,
17%
Associate Degree,
8%
Bachelor and
Beyond, 26%
Source: BLS
Company Spending on R&D
(1 = Do not Spend Money on R&D, 7 = Spend Heavily on R&D)
Source: The Global Competitiveness Report ‘06-’07
MexicoRussian Fed.
ChinaIndia
CanadaU.K.
Korea, Rep.Germany
U.S.Japan
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
Score
Mean = 3.4
University Collaboration
(1 = Minimal or Nonexistent, 7 = Intensive and Ongoing)
Source: The Global Competitiveness Report ‘06-’07
Russian Fed.Mexico
IndiaChina
Korea, Rep.Canada
U.K.Japan
GermanyU.S.
5.5
5.0
4.5
4.0
3.5
3.0
Score
Mean = 3.3
Researchers Per Thousand Employed
Source: OECD
IndiaMexico
ChinaKorea, Rep
GermanyRussian Fed.
CanadaFrance
U.S.Japan
12
10
8
6
4
2
0
Per Thousand Employed
Hot Issues
• Location, location,location
• Talent gaps: theworld is your oyster
• Acquiring andretaining talent inemerging markets
• Building leadership
• HR governance: tocentralize ordecentralize?
• Global assignments:the devil’s in the details
• Country work rules:what you don’t knowwill hurt you
• Global HCM toolkit• Oversight: no “next
best thing to beingthere”
The Strategic – Planning aGlobal Workforce
The Tactical –Managing aGlobal Workforce
Source: Mercer Human Resource Consulting
Developing A Global WorkforceStrategy
• Global talent factbase
- Internal (capabilities,succession candidates,performance, other)
- External (compensationtrends, skills, risks,other)
• Human capitalstrategy linked tobusiness strategy– Talent segmentation
– Optimizing locations
– Productivityrequirements
– Mission criticalcapabilities
– Global rewardsstrategy
– Global trainingstrategy
• Business design lens– Profit models (how profit happens)
– Sources of strategic control (howprofit is sustained)
WorkforceStrategy
Source: Mercer Human Resource Consulting
• Talent segmentation: cultivate stronggeneral management and developer talent
• For GMs:
– Build (vs. buy)
– Emphasis on long service
– Opportunity for international assignments
• For developers:
– Build or buy local talent
– Centralized financial oversight and audits
– Local assignments and retention plans
• Relationship between company and employee brand
• Global rewards philosophy, policies, positioning, andincentive plans; higher pay positioning for GMs andDevelopers relative to markets
• Local salary and benefits benchmarks, except for globalemployees
Example: People Strategy
Growththrough:
• Strong globalbrand
• Distributedmulti-sitemanagement
• Consistentglobaloperatingnorms
• Operating aswell as assetappreciationprofit
Business Strategy People Strategy
Source: Mercer Human Resource Consulting
Mercer Human Resource Consulting’s Decision Support Framework
Information gathering andanalysis
Current and futurebusiness models
Market/product/customer
Identification of value drivers
Enterprise roadmap
Location Analysis
Location-sensitivevalue drivers
Impact of location on value drivers
Criteria and importance of criteria
for evaluation geographies
Customer, competitive, labor,
supplier, and country data
Optimalgeographic
strategy
Strategyformulation
Relative geographic
attractiveness
Strategyimplementation
Strategyexecution
Action plan
Risk mitigation plan
Organizational
development
Location-specific internaland external data
Managing A Global Workforce Greater Need For
• Centralization of key HR processes for strategic impact
– (e.g., leadership profiles, succession, training, performance management
and measurement)
• Global internal data capture regarding workforce capabilities,performance, and rewards using software tools
• Reliable external labor market data
– (e.g., pay trends, skill availability, economic conditions, risk factors (e.g.,
IP), regulatory environment (e.g., flexibility), cultural norms)
• More even execution
– (e.g., management systems, international assignment policies)
• Using local partners and resources, particularly in emergingmarkets
• Management by flying about
Source: Mercer Human Resource Consulting
“Engaged” Employees
Source: Globoforce Inc.
A world of difference between “willing” and“engaged” employees.
“Willing” employees get the job done as required. They do
what’s necessary but often no more.
“Engaged” employees look to redefine the job to improve
efficiency, effectiveness and results. They seek out
opportunities to go beyond, try new approaches, test
boundaries, achieve personal or team bests – because
they find it stimulating, challenging and satisfying.
Higher Engagement = Higher Profit
Gallup Studies Proved Higher Engagement Levels
•27% higher profits•50% higher sales•50% higher customer loyalty•38% above average productivity
Source: Atlas Venture
Impact on ROI
•The 2006/7 WorkUSA survey shows that financial performance oforganisations is strongly related to employee engagement. For thetypical S&P 500 organisation a significant improvement in employeeengagement is associated with a $95 million increase in revenue.Towers Perrin WorkUSA Survey, 2006/07
•15% improvement in levels of engagement correlates with a 2%improvement in operating margin. If you take all the evidence, there's acompelling case that an organisation with engaged people [will] dofinancially better than one with disengaged people." Towers Perrin2004
•Companies that utilized an effective employee recognition programenjoyed a 109% three-year median return to shareholders vs. a 52%return for the same period for those companies that did not. WatsonWyatt Study of 3 million employees, as quoted in Forbes magazine(2004)
Source: Atlas Venture
Impact on Employee Retention &Satisfaction
•Engaged staff are far more likely to stick with theiremployer. Worldwide, six-out-of-ten (59%) of highly-engaged employees said they planned to stay with theiremployer, compared with 24% of disengaged staff. TowersPerrin's Worldwide Employee engagement survey 2005
•88% of employees cited a lack of acknowledgement astheir top work issue. 79% of employees cite a lack ofrecognition as the key reason for leaving a job. LynnLearning Labs, Society for Human Resource ManagementStudy 2004
Source: Atlas Venture
FORTUNE’s “100 BestCompanies To Work For ®”
2007 Best Companies – Top Ten
1. Google2. Genentech3. Wegmans Food Markets4. Container Store5. Whole Foods Market6. Network Appliance7. S.C. Johnson & Son8. Boston Consulting Group9. Methodist Hospital Systems10.W.L. Gore & Associates
Source: http://money.cnn.com/magazines/fortune/bestcompanies/2007/index.html
Gradation of Succession
Proactive Talent
Development
• Assess talentstrength and
assigndevelopmentactions to ensurereadiness
SuccessionManagement
Risk Management
• Informally namesingle successorsfor highestpositions
• Minimizeimmediate risk ofvacancies
Replacement Planning
Talent Assessment
• Formalizedprocess to assesstalent strength
• Minimize risk bypreventingimmediate jobvacancies andpipelineshortages
SuccessionPlanning
Source: Boston CEO Roundtable
© 2007~ Proprietary and Confidential/ Jeff Cohn
Why This is Relevant
MILPITAS, Calif.--February 14,2007—
Solectron Corporation(NYSE:SLR), a leading providerof electronics manufacturingand integrated supply chainservices, today announced thateffective immediately, Presidentand CEO Michael R. Cannon hasresigned to join Dell in the newlycreated position of President,Global Operations. Solectron'sChief Financial Officer PaulTufano has been named interim
CEO while a global search isconducted.
Round Rock, Texas, February14, 2007
Dell today announced theappointment of Michael R.Cannon to serve as President,Global Operations, effectiveFebruary 26, 2007. Mr. Cannon,who was most recentlyPresident and Chief ExecutiveOfficer of SolectronCorporation, will report toMichael Dell, Chairman and CEOof Dell Inc.
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Where We Stand
• Succession planning broken in most companies
• 1/2 of $500M+ companies have no meaningful executivesuccession plans
• A 2005 CLC survey found only 20% satisfied withsuccession process
• Too dependent on outside talent for key positions
• 55% of outside CEOs who departed were forced to depart bytheir boards vs. 34% of insiders
• Only 24% of companies believe their leadershipdevelopment activities are aligned with strategic goals.Even worse, goals are a moving target.
• HR is at mercy of executive search firms
• Insiders can have problems too!
Source: Boston CEO Roundtable
© 2007~ Proprietary and Confidential/ Jeff Cohn
Holistic Approach to TalentManagement
• Cross-organizationaltalent sharing
• Define key positiondescriptions
• Leadership successionplanning
• Outplacement
• High potential leadership identification• Leadership proficiency model definition• Internal and external recruiting processes• Evaluation and feedback system• Performance calibration• Formal leadership assessment
• Mentoring Programs• Individual Development
Planning• Diversity Initiatives• Cross-Functional Training and
Action Learning Programs
Identify Talent
Deploy Talent Develop Talent
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Issues Facing CEO/owner of a LargeFamily-owned Business
SuccessionPlanning
Learning &
Development
Performance
Management
Departure/Retirement
Recruitment
Business Strategy
Staffing/ Career
Planning
“What are theright metrics?”
“How can Icreate the right
process?”
“When should I bring inoutside talent”
“What’s the bestway to groom
future leaders?”
“How do Ihandle poorperformers?”
“How do I handlekey vacancies?”
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Their Guiding Principles—Relevant for All
• Develop practical approach
• Ensure alignment of developmental activities
• Focus on key developmental activities
• Leverage best practices
• Ensure Line leadership
• Deliver a measurable approach
• Build HR capability and capacity
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
The Result: TAO
Create a process that ensures the RIGHT PERSON is in the RIGHT
POSITION at the RIGHT TIME for the RIGHT REASON
Project Vision
Project Approach
IdentifyTalent
Key A
cti
vit
ies:
• Calibrate PerformanceRatings
• Create Descriptions for KeyPositions
• Develop IndividualDevelopment PlanningProcess
• Design and Launch
Executive LeadershipDevelopment Conference
• Develop Cross-FunctionalTraining Program
• Create Mentoring Model
• Develop High-PotentialEmployee ProficiencyModel andDevelopment Program
• Develop Talent Bank
DevelopTalent
Deploy Talent
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Getting Started: Assessing Organization
• Progress developing leaders given the amountof time has focused on leadershipdevelopment
5. Are they on schedule?
• Robust, consistent, complete and cutting-edge
1. Are they world-class?
• Complementary to and enables each other’sleadership development initiative
2. Are they aligned?
• Distributed, communicated and deployedthroughout organization
3. Are they cascaded?
• Enables people to better perform their job,execute corporate strategy and developpotential as a leader
4. Are they making a
positive impact?
• Aggregation of all criteriaOverall Assessment
DefinitionKey Criteria
* However, best practice trap can occur when off-the-shelf initiatives are adopted with little regard forensuring complementarity of initiatives (see alignment)
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Getting Started: Assessing the Talent
• Assess and benchmarkthe currentperformance andsuccession readiness ofexecutives compared tointernal and externaltalent
• Identify developmentalneeds for eachexecutive
SuccessionPlanning
CEOTransition
Mergers &Acquisitions
StrategyImplementation/Reorgani-zation
• Review the strengthand weaknesses ofthe inheritedleadership team
• Ensure individuals are inthe appropriate roles
• Highlight potentialretention issues
• Select, retain andintegrate the besttalent for keyleadership roles
• Evaluate the strengths andweaknesses of theexecutive team relative tothe new strategicrequirements
• Identify the needto modify roles orhire new talent tomaximizeperformance
Executive assessment and evaluations help organizations make criticaldecisions about their talent at any stage in a company’s lifecycle
Source: Boston CEO Roundtable
© 2007~ Proprietary and Confidential/ Jeff Cohn
Lessons Learned
• Make key decisions about your talent strategy
– Focus on a few vs. many initiatives
– Establish consistent communications
– Evaluate your organizational bandwidth
– Create a roll-out timeline
– Identify skills required for future
– Consider external vs internal recruiting
• Institutionalizing an ATM system takes3-5 years
• Program design must align with existing and future culture
• Do an honest assessment--of the organization and of keytalent
© 2007~ Proprietary and Confidential/ Jeff Cohn
Source: Boston CEO Roundtable
Corporate Executive Board Research2006
• Poll of international senior HR managersshowed:– 75% said “attracting and retaining talent” was the No.1 priority
– 62% worried about company-wide talent shortages
• Survey of 4,000 hiring managers showed:– Average time to fill a vacancy had increased from 37 to 51
days
– > one-third hired below average candidates “just to fill a
position quickly”
– One in three employees had recently been approached by
another firm
Source: Watson Wyatt Worldwide
A World of Poachers ……
0 10 20 30 40 50 60
Britain
United States
Canada
Australia
China
India
Source: Corporate Executive Board, Recruiting Roundtable, 2006
Employees contacted by anotherorganisation, %
Talent Shortage Around the Region
• China – all industry turnover at 15%
• Hong Kong - all industry turnover at 16.5%
• India - turnover in BPO 45%, IT/ITES 25%
• Indonesia - critical shortages in Oil & Gas, Banking,FMCG
• Japan - retiring ‘boomers’ shrink skill base
• Philippines - booming BPO draining other sectors
• Singapore - critical shortage of senior management skills
• Vietnam - limited talent pool to worsen with WTOaccession
Source: Watson Wyatt Worldwide
Salary increases in Asia Pacific
4.00%
7.80%
3.00%
13.75%
2.75%
5.10%
3.90%
7.10%
4.30%
10.67%
3.80%
12.00%
6.10%
11.20%
9.17%
6.22%
4.00%
8.15%
11.49%
2.90%
5.50%
9.21%
4.00%
7.20%
4.30%
8.66%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Australia China Hong Kong India Indonesia Japan Malaysia Philippines Singapore South
Korea
Taiwan Thailand Vietnam
2006 Actual Salary Increase %2007 Anticipated Salary Incrrease %
Source: Watson Wyatt Worldwide
Reward Tools Cited as Highly Effectivefor Attracting & Retaining Talent
• Paying within or above market
• Short-term incentives and bonuses
• Creative rewards or recognition programs for topperformers, key talent, “hot skills”
• Accelerated salary reviews
• Pay for competencies and/or skills
• Signing bonuses (for critical positions)
• Retention bonuses (stay for pay)
So what works in your market?
Source: Watson Wyatt Worldwide
Difficulties Cited by Employers inAttracting Talent
8%
8%
8%
11%
17%
49%
Non-Competitive Long-Term Incentives
Lack of Job Flexibility
Lack of Development Opportunities
Non-Competitive Variable Bonus &
Incentives
Unattractive Benefits
Non-Competitive Basic Salaries & Fixed
Bonus / Allowances
Source: Watson Wyatt Survey of Strategic Rewards & Pay Practices
Difficulties Cited by Employers inRetaining Talent
4%
8%
13%
17%
28%
32%
Unattractive Benefits
Non-Competitive Variable Bonus &
Incentives
Lack of Job Flexibility
Non-Competitive Long-Term
Incentives
Non-Competitive Basic Salaries &
Fixed Bonus / Allowances
Lack of Development Opportunities
Source: Watson Wyatt Survey of Strategic Rewards & Pay Practices
Top performers want more…and we’re not talking about just $$
Employers ’ OpinionsTop Performing Employees ’ Opinions
Source: Strategic Rewards ™2004/5, Survey of Top -Performing Employees
79%
69%
56%
57%
50%
23%
53%
56%
20%
29%
23%
16%
12%
38%
36%30%
18%
65%
30%
26%
36%28%
29%26%
“ ”
Source: Watson Wyatt Worldwide
Different talent issues facing MNCs,SOEs and private companies in China
Multi-National Corporations
Localization
Higher turnover
Increasing labor costs
Lack of experienced managersand senior professionals inbooming sectors
Large Private Companies
CEO succession planning
Cultural conflicts as a result ofintroducing professionalmanagers
Higher turnover
Size proliferation andeagerness for talents
Globalization requires newskills and new talents
State-Owned Enterprises
SOE transformation –laid-offs,HR changes
Government appointment of topmanagement
Non-attractive compensationfor senior executives
Talent flow barrier for middle totop management within SOEs
Globalization requires newskills and new talents
Aging workforce and resistanceto change
Heated Talent War
Source: Watson Wyatt Worldwide
Potential Leadership Crisis in China?
Sources: CEO Succession 2003 “The Perils of Good Governance ”, Booz Allen Hamiltons and “China Leadership Style Survey ”, 2005,
Kornferry
50
49
37
USA
Europe
China
Average CEO age
A Young Management Cadre
China’s education systems focus on technical skills, rather thanthe “softer” management competencies.
Technical
Financial
Quantitative
Operational
Learning bymemory
Practical
People management
Qualitative
Problem-solving
Innovative
A recent Chinese government survey suggests that only40% of Chinese CEO’s had attended college, and of theseonly 20% had management degrees
The concept of an MBA program in China is relatively new.In 1991 there were only 9 MBA programs. In 2005 thereare 95.
Lack of Well-trained Graduates
Leadership Challenges in China
Source: Newsweek
Old Chinese Saying
“If the master teaches the apprenticeeverything, the master is afraid that his jobis no longer needed.”
Source: Watson Wyatt Worldwide
Key Questions on Talent Management
• How do our people affect the valueof the business?
• What is our philosophy forattracting and retaining talent?– Business case for talent programs?
– Develop our own talent internally orbring in talent from outside?
– How do we define talent in ourorganisation?
• How should we manage our talent?– Trade-off between investment in
people versus new products orservices?
– Build a ‘talent-brand’ to attract thebest people?
Source: Watson Wyatt Worldwide
An integrated approach to TalentManagement
StrategyPrinciples
CommitmentCompetencies
Where do most organisations go wrong?
Source: Watson Wyatt Worldwide
54
52
51
50
47
45
39
38
0 10 20 30 40 50 60
Senior managers don't spend enough high-quality time on talent
management
Line managers are not sufficiently committed to people
development
Organization is 'siloed' and does not encourage constructive
collaboration, sharing of resources
Line managers are unwilling to differentiate their people as top.
average, and underperformers
Senior leaders in organization do not align talent-management
strategy with business strategy
Line managers do not address chronic underperformance effectively
Succession planning and/or resource allocation processes are not
rigorous enough to match right people to roles
CEO and/or senior team don't have shared view of most pivotal
roles
Ob
sta
cle
s
% of Responses
8 most critical obstacles preventing talent management from deliveringbusiness value
Source: McKinsey Quarterly