THE

TA L E N TMANAGEMENTHANDBOOK

CREATING A SUSTAINABLECOMPETITIVE ADVANTAGEBY SELECTING, DEVELOPING,

AND PROMOTINGTHE BEST PEOPLE

Edited byLance A. Berger

Dorothy R. Berger

New York Chicago San Francisco Lisbon LondonMadrid Mexico City Milan New Delhi San Juan

Seoul Singapore Sydney Toronto

SECOND EDITION

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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America.Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproducedor distributed in any form or by any means, or stored in a database or retrieval system, without the prior writtenpermission of the publisher.

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ISBN 978-007-173905-4MHID 007-173905-X

This publication is designed to provide accurate and authoritative information in regard to the subject matter cov-ered. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal,accounting, securities trading, or other professional services. If legal advice or other expert assistance is required,the services of a competent professional person should be sought.

—From a Declaration of Principles Jointly Adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations

Library of Congress Cataloging-in-Publication Data

The talent management handbook : creating a sustainable competitive advantage by selecting, developing, andpromoting the best people / [edited] by Lance Berger, Dorothy Berger. – 2nd ed.

p. ; cm.Includes index.ISBN 978-0-07-173905-4 (alk. paper)1. Career development. 2. Employee motivation. 3. Creative ability in business. I. Berger, Lance A. II. Berger,

Dorothy R.

HF5549.5.C35T35 2011658.3'14—dc22 2010041289

McGraw-Hill books are available at special quantity discounts to use as premiums and sales promotions or for usein corporate training programs. To contact a representative, please e-mail us at bulksales@mcgraw-hill.com.

This book is printed on acid-free paper.

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Contents

Preface vii

Contributors ix

Part I Creating a Talent Management Program for

Organization Excellence 1

1. Designing and Assembling the Building Blocks for OrganizationExcellence: The Talent Management Model, Lance A. Berger and Dorothy R. Berger 3

Building Block 1: Competency Assessment

2. Formulating Competencies, Murray M. Dalziel, Ph.D. 133. Fundamentals of Competency Modeling, Kim E. Ruyle and

J. Evelyn Orr 224. Creating the Workforce of the Future: Projecting and Utilizing

New Competencies, Ron Garonzik, Ph.D., and John B. Larrere 33Building Block 2: Performance Appraisals

5. Designing a Performance Appraisal for Driving OrganizationSuccess, Dick Grote 45

6. Performance Measurement for All Employees, Mark Graham Brown 557. Conducting Performance Reviews that Improve the Quality of

Your Talent Base, David Insler and Angelita Becom 658. Appraising Executive Talent, James F. Reda 769. Selecting the Right Performance Appraisal, Martin G. Wolf, Ph.D. 88

10. Improving Performance through the Employee Value Exchange,Jim Kochanski and JP Elliott 109

Building Block 3: Succession and Career Planning

11. Integrating Succession Planning and Career Planning,William J. Rothwell, Ph.D. 119

12. Determining Every Employee’s Potential for Growth,Murray M. Dalziel, Ph.D. 131

13. Designing a Succession Planning Program, Doris Sims 140

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14. Practical Discussions for Sweet Success,Kevin D. Wilde 148

15. Career Development: Encompassing All Employees,Beverly Kaye, Ph.D., Joyce Cohen, and Beverly Crowell 159

16. CEO Succession Planning, Marshall Goldsmith 16917. Ensuring CEO Succession Agility in the Boardroom,

Dennis Carey, Marc Feigen, and Kevin Cashman 175

Part II Formulating Coaching, Training, and Development Approaches that Drive TalentManagement Processes 181

18. Training and Development: A New Context for Learning,Dale E. Kunneman, Francesco Turchetti, Sharon L. Cresswell,Catherine M. Sleezer 183

19. Developing Your Workforce: Measurement Makes a Difference,Jack J. Phillips, Ph.D., and Lisa Edwards 194

20. Developing Top Talent: Guiding Principles, Methodology,and Practices Considerations, Karol M. Wasylyshyn, Psy.D. 205

21. Coaching for Sustained, Desired Change: Building Relationships and Talent, Richard E. Boyatzis, Ph.D., Melvin L. Smith, Ph.D.,and Ellen Van Oosten 217

22. Developing Leadership Competencies through 360-Degree Feedback and Coaching, John W. Fleenor, Sylvester Taylor,and Craig Chappelow 227

23. Using 360-Degree Feedback for Talent Development,Michael Haid 235

24. Coaching Leaders for Corporate Social Responsibility,Deb Jacobs and Mayra Hernandez 245

25. Integrating Coaching, Training, and Development with Talent Management, Kaye Thorne 255

Part III Making Compensation an Integral Part of Your Talent Management Program 263

26. Driving Success through Differentiation: Compensation and Talent Management, Andrew S. Rosen and Jodi L. Starkman 265

27. Rewarding Your Top Talent, Mel Stark and Mark Royal 27628. Using Long-Term Incentives to Retain Top Talent,

Paul Conley and Dan Kadrlik 28529. Fostering Employee Involvement and Engagement through

Compensation and Benefits, Gerald E. Ledford, Jr., Ph.D. 291

Contentsiv

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Part IV Using Talent Management Processes to Drive Cultures of Excellence 303Theme 1: Using Talent Management Techniques to Drive Culture

30. Establishing a Talent Management Culture, David C. Forman 30531. Linking Culture and Talent Management, Andy Pellant 31532. Creating a Culture of Success: What Every CEO Needs to Know,

Owen Sullivan 32133. Using Onboarding as a Talent Management Tool, David Lee 33134. Employee Engagement and Talent Management,

Deborah Schroeder-Saulnier 340Theme 2: Targeting Cultures that Create Competitive Advantage

for Your Organization

35. Crafting a Culture of Creativity and Innovation,Fredericka K. Reisman, Ph.D., and Theodore A. Hartz, MBA 349

36. Building a Sustainability Culture through Employee Engagement,Max Caldwell and Denise Fairhurst 366

37. Unleashing Talent in Service of a Sustainable Future,Jeana Wirtenberg, Ph.D. 374

38. The Role of Ethics in Talent Management: How Organizations Ought to Behave, Stephen F. Hallam, Ph.D., and Teresa Alberte Hallam, Ph.D. 385

39. Collaboration: Getting the Most Out of Informal Connections,Robert J. Thomas and Yaarit Silverstone 392

Theme 3: Making Diversity Part of Your Competitive Advantage

40. Creating Competitive Advantage through Cultural Dexterity,Reginald F. Butler 403

41. Building a Reservoir of High Performance and High Potential Women,Molly Dickinson Shepard and Nila G. Betof, Ph.D. 409

Part V Using Talent Analysis and Planning Techniques toEnhance Your Talent Management Program 42142. Multiplying Talent for High Performance, David Smith

and Elizabeth Craig 42343. Workforce Planning: Connecting Business Strategy to Talent

Strategy, Ed Newman 43144. Using Workforce Planning as Part of a Talent Management Program,

Robert Conlon, E. Michael Norman, and Aaron Sorensen, Ph.D. 44045. New Tools for Talent Management: The Age of Analytics,

Haig R. Nalbantian and Jason Jeffay 45246. The Role of Line Managers in Talent Planning, Rick Lash, Ph.D.

and Tom McMullen 463

Contents v

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47. Making Recruitment Part of Your Talent Management Process,Randy Jayne 471

48. Making Outplacement Part of Your Talent Strategy,Tony Santora and Melvin Scales 479

49. Developing Talent Management Information Systems,Craig M. Berger 487

50. Implementing an Automated Talent Management System,Guy Gauvin 495

Part VI Innovative Thinking that Can Shape Your

Organization’s Approach to Talent Management 503

51. Rethinking Talent Management Using a People Equity Framework, William A. Schiemann 505

52. Marshalling Talent: A Collaborative Approach to Talent Management, Dave Ulrich, Ph.D., and Michael Ulrich 518

53. The Global State of Talent Management, David C. Forman 52954. A Model for Talent Manager Excellence, Marc Effron and

Jim Shanley 53955. Talent Management Leadership in Government,

Allen Zeman, Ph.D., Anne Kelly, and Allan Schweyer 545

Index 552

Contentsvi

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Preface

THE TALENT MANAGEMENT HANDBOOK HELPS ORGANIZATIONS DRIVE AND SUSTAIN

excellence by proactively using talent management processes to create a culturefor success. Based on our research, consulting assignments, and the input of this book’spreeminent contributors, we conclude that the core talent management frameworkrequired for creating a culture for success consists of three elements. These are:

• A talent management creed composed of a widely publicized set of core princi-ples, values, and mutual expectations that mutually guides the behavior of anorganization and its people. Collectively, the stated principles depict the type ofculture an organization strives to create to achieve its unique portrait for suc-cess. The principles of the creed are embedded into both its talent managementstrategy and in its talent management system through incorporating its doc-trines into selection criteria, competency definitions, performance criteria, andinternal selection and development processes, and all other human resourcespolicies and programs.

• A talent strategy makes explicit the types of people in whom the organizationwill invest. The highest investments are rooted in the organization’s talent creedand each person’s potential for contributing to organizational success now andin the future.

• A talent management system consists of a set of procedures, systems, andprocesses that translate an organization’s talent creed and strategy into a diag-nostic and implementation program for investing in the people who exemplifythe culture that will achieve organization excellence.

This book is organized into six parts. The chapters are arranged to provide readerswith a logical path to creating the talent management framework described above.

Part I establishes the talent management framework. It shows how the different ele-ments of a creed, talent strategy, and the building blocks of a talent management sys-tem are integrated into a unified approach that creates and sustains organizationalexcellence. The building blocks represent assessment tools rooted in the organization’screed that include competencies, performance appraisal, potential forecast, and suc-cession and career planning. The building blocks enable the organization to classify its

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employees based on actual and potential contribution to organizational success and tosuggest the types of investment needed to enhance individual contribution.

Part II describes the types of investments an organization must make to assure that itshuman resources can perform at the highest competitive levels now and in the futurebased on the assessment of its people. This section covers the use of training, develop-ment, coaching, mentorship, and leadership within a talent management plan. TogetherParts I and II provide critical input to helping an organization attract, select, retain, andengage its people.

Part III presents approaches that are used to allocate financial rewards to employeesbased on their actual and potential contribution to employee success.

Part IV links talent management, culture, and business excellence. It describes howorganization philosophies, beliefs, and values establish the parameters that governthe selection, development, and advancement of the people who shape the culture forsuccess that drives business excellence. They include elements such as: ethics, sustain-ability, diversity, engagement, innovation, and creativity.

Part V covers a diverse collection of critical topics that include defining the linkbetween business planning and talent management, workforce analysis, and recruit-ment, outplacement, and information systems that complement other talent manage-ment processes.

Part VI encourages the reader to be imaginative in approaching the unique talent man-agement requirements of their organization. It includes ways to use a “people equityframework” to rethink talent management, use novel “collaborative approaches tomarshall or marshall talent,” consider the “global state of talent management,”“deploy a special model for talent manager excellence,” and use talent management“leadership” to drive success in the government.

Prefaceviii

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ix

Contributors

Angelita Becom, Senior Consultant, Sibson Consulting, Raleigh, North Carolina(Chapter 7)

Craig M. Berger, Director of Education, Society for Environmental and GraphicDesign, Washington, DC (Chapter 49)

Dorothy R. Berger, Partner, Lance A. Berger & Associates, Ltd., Bryn Mawr,Pennsylvania (Chapter 1)

Lance A. Berger, Managing Partner, Lance A. Berger & Associates, Ltd., Bryn Mawr,Pennsylvania (Chapter 1)

Nila G. Betof, Ph.D., Chief Operating Officer, The Leader’s Edge, Bala Cynwyd,Pennsylvania (Chapter 41)

Richard E. Boyatzis, Ph.D., Professor in the Departments of Organizational Behavior,Psychology, and Cognitive Science, Case Western Reserve University, Cleveland,Ohio (Chapter 21)

Mark Graham Brown, President, Mark Graham Brown & Associates, ManhattanBeach, California (Chapter 6)

Reginald F. Butler, Cultural Transformation Services Managing Director,PricewaterhouseCoopers LLP, Tampa, Florida (Chapter 40)

Max Caldwell, Managing Director, Towers Watson, New York, New York (Chapter 36)

Dennis Carey, Vice Chairman, Korn/Ferry International, Scottsdale, Arizona(Chapter 17)

Kevin Cashman, Senior Partner, Korn/Ferry Leadership and Talent Consulting,Minneapolis, Minnesota (Chapter 17)

Craig Chappelow, Global Portfolio Manager, Assessments, Center for CreativeLeadership, Greensboro, North Carolina (Chapter 22)

Joyce Cohen, Senior Consultant, Career Systems International, Sherman Oaks,California (Chapter 15)

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Paul Conley, Consultant, Towers Watson, Minneapolis, Minnesota (Chapter 28)

Robert Conlon, Senior Vice President, Sibson Consulting, Chicago, Illinois (Chapter 44)

Elizabeth Craig, Research Fellow, Accenture, Boston, Massachusetts (Chapter 42)

Sharon L. Cresswell, Talent Management: Competencies and Curriculums, BakerHughes Corporate, Houston, Texas (Chapter 18)

Beverly Crowell, Senior Consultant, Career Systems International, Sherman Oaks,California (Chapter 15)

Murray M. Dalziel, Ph.D., Professor of Management and Director, University ofLiverpool Management School, Liverpool, England (Chapters 2 and 12)

Lisa Edwards, Senior Director for Talent Management, Corbis, Seattle, Washington(Chapter 19)

Marc Effron, President, The Talent Strategy Group, New York, New York (Chapter 54)

JP Elliott, Senior Consultant, Sibson Consulting, Los Angeles, California (Chapter 10)

Denise Fairhurst, Senior Consultant, Towers Watson, New York, New York (Chapter 36)

Marc Feigen, Founder, Feigen & Company, New York, New York (Chapter 17)

John W. Fleenor, Research Director, Center for Creative Leadership, Greensboro,North Carolina (Chapter 22)

David C. Forman, Chief Learning Officer, Human Capital Institute, Washington, DC(Chapters 30 and 53)

Ron Garonzik, Ph.D., Vice President, Hay Group, Boston, Massachusetts (Chapter 4)

Guy Gauvin, Executive Vice President of Global Services, Taleo, Dublin, California(Chapter 50)

Marshall Goldsmith, Executive Coach, Leadership Development and BehavioralChange, San Diego, California (Chapter 16)

Dick Grote, President, Grote Consulting Corporation, Frisco, Texas (Chapter 5)

Michael Haid, Senior Vice President, Global Solutions, Right Management,Philadelphia, Pennsylvania (Chapter 23)

Stephen F. Hallam, Ph.D., Professor of Management, University of Akron, Akron,Ohio (Chapter 38)

Teresa Alberte Hallam, Ph.D., Senior Lecturer, University of Akron, Akron, Ohio(Chapter 38)

Contributorsx

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Theodore A. Hartz, MBA, Executive Director of Customized Learning SolutionsDrexel University Goodwin College of Professional Studies, Co-DirectorDrexel/Torrance Center for Creativity and Innovation, Drexel University,Philadelphia, Pennsylvania (Chapter 35)

Mayra Hernandez, CEO, Impactomb, New York, New York (Chapter 24)

David Insler, Senior Vice President, Sibson Consulting, Los Angeles, California(Chapter 7)

Deb Jacobs, Partner, Axiom Consulting Partners, New York, New York (Chapter 24)

Randy Jayne, Ph.D., Managing Partner, Heidrick & Struggles, Global Aerospace,Defense, and Aviation Practice, McLean, Virginia (Chapter 47)

Jason Jeffay, Partner and Global Talent Management Leader, Human Capitalbusiness, Mercer, Atlanta, Georgia (Chapter 45)

Dan Kadrlik, Stock Plan Consultant, Executive Pay and Benefits, Target Corporation,Minneapolis, Minnesota (Chapter 28)

Beverly Kaye, Ph.D., Founder and CEO, Career Systems International, ShermanOaks, California (Chapter 15)

Anne Kelly, Principal, Center for Human Capital Innovation (CHCI), Washington,DC (Chapter 55)

Jim Kochanski, Senior Vice President, Sibson Consulting, Raleigh, North Carolina(Chapter 10)

Dale E. Kunneman, Vice President Human Resources Global Products, BakerHughes Corporate, Houston, Texas (Chapter 18)

John B. Larrere, National Practice Leader, Leadership and Talent, Hay Group,Philadelphia, Pennsylvania (Chapter 4)

Rick Lash, Ph.D., Canadian Leadership and Talent Practice Leader, Hay Group,Toronto, Canada (Chapter 46)

Gerald E. Ledford, Jr., Ph.D., President, Ledford Consulting Network, LLC, RedondoBeach, California (Chapter 29)

David Lee, Principal, HumanNature@Work, Bar Mills, Maine (Chapter 33)

Tom McMullen, North American Reward Practice Leader, Hay Group, Chicago,Illinois (Chapter 46)

Haig R. Nalbantian, Senior Partner and Director of Global Research andCommercialization, Human Capital business, Mercer, New York, New York (Chapter 45)

Contributors xi

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Ed Newman, Founder, The Newman Group, and Leader, Futurestep, US, Los Angeles, California (Chapter 43)

E. Michael Norman, Senior Vice President, Sibson Consulting, Los Angeles,California (Chapter 44)

J. Evelyn Orr, Intellectual Property Development Consultant, Korn/FerryLeadership and Talent Consulting, Minneapolis, Minnesota (Chapter 3)

Andy Pellant, Managing Partner, Emergentedge, Hertford, England (Chapter 31)

Jack J. Phillips, Ph.D., Chairman, ROI Institute, Inc., Birmingham, Alabama (Chapter 19)

James F. Reda, Founder and Managing Director, James F. Reda & Associates, LLC,New York, New York (Chapter 8)

Fredericka K. Reisman, Ph.D., Professor, Director Drexel/Torrance Center forCreativity and Innovation, Drexel University, Philadelphia, Pennsylvania (Chapter 35)

Andrew S. Rosen, Executive Vice President, ORC Worldwide, New York, New York(Chapter 26)

William J. Rothwell, Ph.D., SPHR, Professor of Workforce Education andDevelopment, Department of Learning and Performance Systems, College ofEducation, The Pennsylvania State University, University Park, Pennsylvania(Chapter 11)

Molly Dickinson Shepard, Chief Executive Officer, The Leader’s Edge, BalaCynwyd, Pennsylvania (Chapter 41)

Yaarit Silverstone, Talent & Organization Performance Managing Director,Accenture, Atlanta, Georgia (Chapter 39)

Doris Sims, SPHR, Founder and President, Succession Builders LLC, Flower Mound,Texas (Chapter 13)

Catherine M. Sleezer, Competencies and Curriculum Supply Chain, Baker HughesCorporate, Tulsa, Oklahoma (Chapter 18)

David Smith, Talent & Organization Performance Managing Director, Accenture,Hartford, Connecticut (Chapter 42)

Melvin L. Smith, Ph.D., Professor in the Department of Organizational Behavior,Case Western Reserve University, Cleveland, Ohio (Chapter 21)

Aaron Sorensen, Ph.D., Senior Consultant, Sibson Consulting, Chicago, Illinois(Chapter 44)

Mel Stark, Vice President, Hay Group, Jersey City, New Jersey (Chapter 27)

Jodi L. Starkman, Executive Vice President, ORC Worldwide, New York, New York(Chapter 26)

Owen Sullivan, Chief Executive Officer, Right Management, Philadelphia,Pennsylvania (Chapter 32)

Sylvester Taylor, Director, Assessments, Tools, and Publications, Center for CreativeLeadership, Greensboro, North Carolina (Chapter 22)

Robert J. Thomas, Institute for High Performance Executive Director, Accenture,Boston, Massachusetts (Chapter 39)

Kaye Thorne, Founder and Managing Partner, Talent Perspectives, Dorset, England(Chapter 25)

Francesco Turchetti, Director Talent Management, Baker Hughes Corporate,Houston, Texas (Chapter 18)

Dave Ulrich, Ph.D., Professor, Ross School of Business, University of Michigan, AnnArbor, Michigan, and Partner, The RBL Group, Provo, Utah (Chapter 52)

Michael Ulrich, Research Associate, The RBL Group, Provo, Utah (Chapter 52)

Ellen Van Oosten, Department of Organizational Behavior, Weatherhead School ofManagement, Case Western Reserve University, Cleveland, Ohio (Chapter 21)

Karol M. Wasylyshyn, Psy.D., President, Leadership Development, Philadelphia,Pennsylvania (Chapter 20)

Contributors xiii

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Kevin D. Wilde, Vice President, Organization Effectiveness and Chief LearningOfficer, General Mills, Minneapolis, Minnesota (Chapter 14)

Jeana Wirtenberg, Ph.D., Director, External Relations and Services, Institute forSustainable Enterprise, Fairleigh Dickinson University, Teaneck, New Jersey (Chapter 37)

Martin G. Wolf, Ph.D., President, Management Advisory Services, Jalisco, Mexico(Chapter 9)

Allen Zeman, Ph.D., President, Center for Human Capital Innovation (CHCI),Washington, DC (Chapter 55)

Contributorsxiv

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