Strategic Talent Management Forum

New Era for Talent ManagementToday’s challenges and tomorrow’s opportunitiesKeith Caver, North America Practice Leader, Talent Management and Organizational Alignment, Towers Watson

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Workforce SegmentProblems Attracting

Problems Retaining

Critical skill employees 72% 56%

High potential employees 60% 55%

Top-performing employees 59% 50%

All employees 31% 25%

Source: Towers Watson 2012-2013 Global Talent Management and Rewards Study — Global.

Difficulty finding the right peopleand keeping the people you need

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Engagement is at risk. It’s not about ‘feeling good’…it’s

about having the tools, colleagues,

time, capacity to fully

commit to work.

““

- Towers Watson 2012 Global Workforce Study

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The current state of sustainable engagement of the global workforce

Source: Towers Watson 2012 Global Workforce Study — Global.

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Further complicating thesechallenges are other talent realities

Friction points

Structural mismatches

Security

Unsustainability

Skill gaps

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global skills

agile thinking

digital business skills

relationship building

The next critical skills

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A deeper look at the emerging skill sets

Oral and written communication

Co-creativity and brainstorming

Collaboration

Teaming (including virtual teaming)

Relationship building (with customers,partners, government, etc.)

0 10 20 30 40 50 60 70

% of respondents

Relationship building

0 10 20 30 40 50 60

Ability to see the “big picture”

Managing paradoxes,balancing opposing views

Innovation

Ability to consider and prepare for multiple scenarios

Dealing with complexityand ambiguity

% of respondents

Agile thinking

Ability to use social media and “Web 2.0”

Digital design skills

Understanding of corporate IT software and systems

Ability to work virtually

Digital business skills

0 10 20 30 40 50 60% of respondents

Digital business skills

Global skills

Foreign language skills

Ability to managediverse employees

Ability to work in multiple overseas locations

Cultural sensitivity

Understanding international markets

0 10 20 30 40 50 60% of respondents

Source: Global Talent 2021 Study conducted by Oxford Economics and Towers Watson, 2012.

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Future talent friction points

Deficit countries

Surplus countries

At equilibrium

Source: Global Talent 2021 Study conducted by Oxford Economics and Towers Watson, 2012.

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Global forces and trends are changing demands on employers and employees

Talent 2021GWS

Transformative HR

TM&R

Ongoing cost pressures and continual belt-tightening in most markets, increasing employers’ focus on maximizing workforce productivity

Dispersed and diverse workforce, enabled by technology to work anywhere, anytime, across national/organizational boundaries in increasingly innovative work arrangements

Dramatic shifts in skill requirements for future growth, coupled with increasing misalignment between supply of/demand for talent worldwide

Pressured, stressed workforce, struggling to do more with less, looking for long-term security and stability in a world that isn’t offering much of either

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What are the strategic implications?

UP-SKILL

Re-skill

Creativesourcing

SustainabilityWORK

DISAGGREGATION

technology

develop

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How to respond

Retain key people

Hire more from outside

Grow and develop

Improve performance

Raise engagement

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Savvy employers will need to thinkdifferently about their practices in the future

Apply the samerigor, effort andsophistication tohuman capitalplanning as to

business planning

Think more broadly– and creatively –

about wheretalent is sourced

Embrace the virtualworkplace andsupport a wide

range of differentwork scenarios

Invest more heavilyin retraining and

reskilling

Rethink andrestructure how

certain workis accomplished

Business rigor

Talent sourcing

Virtual workplace

Re-skillingRethinking

work

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Our latest research

• Engagement is at risk• Pay continues to be major headline, but career advancement is the new

retention risk• Talent Paradigm – know the critical roles for future business success; know

your critical talent ; focus your interventions on those holding critical roles,or your talent that shows critical potential – SEGMENTATION

• MIND THE GAP – about EE/ER differences andabout growing engagement gap

Sustainable engagement

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Behind these numbers are gaps in areas particularly relevant in today’s environment

Traditionally Engaged

Belief in company goals and objectives

Emotional connection (pride, recommendation)

Willingness to give extra effort to support success

Energy

Can sustain energy needed at work

Have social supports in work environment

Have sense of enthusiasm and accomplishment at work

Enablement

Freed from obstacles to succeed at work

Have resources to perform well

Can meet work challenges effectively

Ensuring people are capable of doing their

jobs well

Ensuring people have capacity to perform at

their best

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The payoff for closing gaps in the drivers of sustainable engagement is substantial

Only 17% of employees with high engagement are high retention risks

compared to 58% of disengaged employees

3x

High sustainable engagement companies’ operating margins are

3x higher than those with the lowest levels of engagement

6.5

An average of 7.6 days of lost productivity per year for employees with high engagement vs. 14.1 days for the disengaged

41%

operating margin fewer days lost

lower retention risk

Source: Towers Watson normative database.

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The top drivers are influencedby an employer’s value proposition,EVP, and Total Rewards programs

Leadership1 Effective at growing the business Sincere interest in employees’ well-being Behave consistently with organization’s core values Trust and confidence in job being done

Stress, Balance and Workload2 Stress levels at work are manageable Healthy balance between work and personal life Work arrangements are flexible Enough employees in work group to get job done right

Goals and Objectives3 Good understanding of organization’s business goals

and steps needed to reach those goals Understanding of how job contributes to the

organization achieving its business goals

Supervision4 Treats me with respect Encourages new ideas and ways of doing things Acts in ways consistent with his or her words Effective career development conversations

Image5 Organization highly regarded by general public Organization conducts its business with honesty and

integrity

Source: Towers Watson 2012 Global Workforce Study — Global.

Top Drivers of Sustainable Engagement

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Differentiate to attract and retain

Use the employee value proposition to drive the right behaviors and performance.

Differentiate for key employee groups.

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A formalized EVP helps organizations address critical challenges with attraction, retention and engagement of talent

5Xmore likely to report their

employees are highly engaged

2Xmore likely to report achieving

financial performance significantly above their peers

Companies that have adopted an increasingly integrated approach to Total Rewards strategy, design and delivery decisions — supported by an overarching Employee Value Proposition — are:

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Questions