the conference board of canada getting talent management on the right track rethinking measurement...

The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca

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


Background—Measuring 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

Session Outline


Session Objective

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


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.


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


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


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


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


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


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


Talent Management...

Begins with defining the “business”…no matter whether that is serving the public or manufacturing automobiles

Then creating and aligning the organization’s strategic human resource plan and all people-related practices to the strategic direction of the business


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


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.”



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


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?


Categories of People Measures

“What is the relationship between the changes in the quality of the employees and our competitive success?”Impact

“What is the relationship between our HR practices and the quality of our people?” These metrics should chart changes in employees’ ability, opportunity, motivation, and performance.

Effectiveness

“What is the level and quality of HR practices produced from the resources (time and money) spent?”

Efficiency

Source: John Boudreau and Pete Ramstad, HumanCapital Bridge ™


Possible Learning & Development Indicators

Impact

Effectiveness

Efficiencynumber 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

Impact

Effectiveness

Efficiency


Who is Using Metrics Strategically?

% reporting “high” use of metrics to meet strategy

over past three years

% anticipating their strategic use of metrics will increase over next

three years

While strategic use of metrics is not widespread today, it will increase

12%

84%

Source: The Conference Board Inc.

Measuring More Than Efficiency


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


Measuring Human Capital ValueHR Practices/Org Strategies

Human Capital Value Driver

Determinant II

Determinant V

Determinant I

Determinant IV

Determinant III

Employee Outcomes

• capabilities• attitudes• behaviours

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

Organizational Outcomes

Outcome 1Outcome 2Outcome 3

Measures

Outcome 1Outcome 2Outcome 3

Measures

Measure 1Measure 2Measure 3

Measures


Employee Engagement

Capture a bigger portion of the employee mindshare

The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca

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 in“collegial, flexible workplace”


What is Employee Engagement?

A Working DefinitionEngagement is the state of emotional and intellectual

commitment to an organization. Employees are willing to act personally to carry out the

organization’s 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


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.


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.


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.”


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 supervisor’s problems are my own.”


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.”


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.”


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 company’s goals and objectives.”

“I talk up this company to my friends as a great place to work for.”


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.”


Model of Employee Engagement

OrganizationEffectiveness

EmployeeOutcomes

Justice/FairnessJob

Characteristics

Supervisor Support

RewardsOrganization

Support

Employee Engagement

Job and oOrganization Fit


Basic Needs

Self Esteem & Worth

Self Actualization

Growth

Affiliation

Basic Needs

Remember Maslow?

Providing for employees’ natural needs


The Sum of the Whole is Greater Than the Sum of its Parts

Gallup’s Psychological Mountain – You can’t reach the summit without first getting to base

camp Aon’s Performance Pyramid

– Productivity, Pride and Retention

– Employers are failing to satisfy basic security needs


Leadership

The “difference maker” in a turbulent, competitive marketplace.

John Wetmore, Former CEO, IBM Canada. Ltd.


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


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 alBuilding the Leadership Pipeline


Building a Leadership Pipeline: Implications for HR

Develop internally—buying 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


A Model of Leadership Effectiveness

Leadership Development

Leadership Capabilities

Leadership Effectiveness

Employee Outcomes

Organization Outcomes


Leadership Culture Audit Tool

Leadership Development

Leadership Capabilities

Leadership Effectiveness

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


Begin with the end in mind...

LEADERSHIP CAPABILITIES

For Example Communicating and

listening Planning and decision-

making Motivating others

LEADERSHIP DEVELOPMENTFor ExampleCoaching and mentoringSpecial work assignmentsAssessmentDevelopment plans

LEADERSHIP EFFECTIVENESS

For Example High trust levels Employees feel valued Increased innovation Organization successful,

more competitive


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


Integrated Talent Management: Strategy and Processes

“The single most important driver of organizational performance and individual managerial success is talent.”Bradford Smart, Topgrading


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


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


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


TMI—Talent 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


TMI—Process and Practice Dimensions

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


TMI—Process 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


An Example—Talent AcquisitionHow 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


TMI—Talent AcquisitionHow 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


TMI—Talent AcquisitionSample 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


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


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!


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.”



Thank You !

the conference board of canada getting talent management on the right track rethinking measurement...

Documents

conference board of

talent slide

treasury board of canada

sears canada

hallmark canada

talent pool

retention of talent

integrative talent management