the supply chain of talent

The Supply Chain of TalenT

3 A visuAl summAry

4 introduction

5 ExEcutivE summAry

6 AssEssing skillEd tAlEnt chAllEngEs

7 supply chAin of tAlEnt — thE nEw tAlEnt Acquisition strAtEgy

9 thE supply chAin of tAlEnt frAmEwork in Action

11 usE of supply chAin of tAlEnt & BusinEss lEAdEr sAtisfAction

13 rEcommEndAtions & conclusion

14 A closEr look: suBgroup AnAlysEs

18 AppEndix A: rEspondEnt dEmogrAphics

20 AppEndix B: works consultEd

21 dEfinition of kEy tErms

contEnts

2

The Supply Chain of Talent

Copyright © 2012 Human Capital Institute and Kelly Services. All rights reserved.

ABout this rEsEArch

This research was developed in partnership between the Human Capital Institute (HCI) and Kelly Services between April 2011 and February 2012. Two hundred eighty professionals from HCI member companies completed a 25-item survey. The survey was supplemented with several in-depth interviews with talent management thought leaders from organizations such as the Wharton School of Business and Intel Corporation. HCI researchers compiled additional secondary research from a variety of sources, including white papers, articles, books, interviews, and case studies. Several of these are cited in the report, and a full reference list can be found on page 20.

T h e S u p p ly C h a i n o f Ta l e n T

3

u.S. workerS are unemployed buT There are 3.2 million unfilled jobS aCroSS The CounTry.

14m

of BusinEss lEAdErs ArE not “vEry sAtisfiEd” with thEir ABility to AccEss tAlEnt whEn nEEdEd.

79%

leSS Than 10% of lEAdErs outsidE north AmEricA ArE sAtisfiEd with thEir AccEss to thE right tAlEnt for thE joB.

14% silEnt gEnErAtion (1935–1945)52% BABy BoomErs (1946–1964)25% gEn x (1965–1979)9% gEn y (1980–1992)

The fruSTraTion of TalenT Supply iS wideSpread

55%adopT The ‘Supply Chain of TalenT’

framework To manage The Supply and demand of TalenT

35% fail To evaluaTe The exTernal Supply alTogeTher

leSS Than halfof organizaTionS ConSider and analyze The exTernal demand for TalenT

SaTiSfaCTion wiTh aCCeSS To TalenT

6% non-usErs

33% supply chAin usErs

who do we employ?

who iS available?

who will we need?

who elSe iS CompeTing for ThiS TalenT?

of orgAnizAtions conduct mArkEt AnAlysis of ExtErnAl supply, including A rEviEw of

workforcE dEmogrAphics such As AgE, EducAtion lEvEl And thE unEmploymEnt rAtE

of orgAnizAtions in north AmEricA work with sEArch firms/AgEnciEs to BEttEr

undErstAnd thE AvAilABility of tAlEnt. by CompariSon, 39% of CompanieS in oTher

regionS uTilize ThiS meThod of reSearCh.

<10%

20%

30%of thosE who oBtAin ExtErnAl supply

informAtion rEly on populAr sociAl mEdiA nEtworks, such As linkEdin—which whEn usEd As thE only mEthod of rEsEArch, cAnnot providE A

holistic viEw of thE ExtErnAl tAlEnt pools

juST

The effects of the Great Recession of 2008-2009 continue to reverberate worldwide as economies struggle to realize sustained growth and unemployment rates remain high. In this sluggish recovery, a talent paradox has emerged.

More talent is available today than at nearly any other time in history. A U.S. unemployment rate of 9 percent lends itself to an increasingly widespread pool of available talent, but continued advancements in technology have created a need for skills and experience that remain in short supply. A 2010 report noted, “There are still about 3 million job openings across the country” and employers are struggling to find qualified people for many of those positions.”3 As a result, the current talent supply is simply unable to meet aggregate organizational demand.

To be successful and fully leverage the large talent pool today, organizations must have a more comprehensive understanding of the availability and competition for talent within given sectors, including inside and outside their own companies.

This understanding can be greatly informed by basic Supply Chain Management principles. When applied to the challenge of managing talent, we refer to that framework as the Supply Chain of Talent. By considering the following four questions, business and human capital leaders can assess where they are and where they need to be in talent procurement:

• Who is employed and what are their skill set profiles?

• What skills are needed to meet short- and long-term strategic objectives?

• Where are the needed skills? How will that talent be identified?

• What other organizations are competing for this talent and what are the levers of differentiation required to attract needed talent?

Companies that clearly understand the talent available in-house and clearly gauge the talent available outside the organization will be better positioned to access and obtain the workforce needed for success.

4

inTroduCTion


3 Arnold, Chris (Nov. 16, 2010). To Fill Job Skills, Firm Brings Training In House. npr.org.

TereSa Carroll

It’s a paradox of our economic times: more than 14 million U.S. workers are unemployed, but 3.2 million positions are open.1 Economists call this mismatch “structural unemployment.” Filling skill-specific positions has been a widespread problem for high-tech companies, illustrated by Microsoft’s recent plea to the Senate Judiciary Committee to allow them to “import” more workers to fill talent gaps.2 But organizations in other sectors are scrambling to fill positions as well. Skill shortages have been reported for jobs as varied as electricians, scientists, CAD/CAM (computer-aided design and manufacturing), truck drivers, trades people, and call-center workers.

This report summarizes the results of research undertaken by the Human Capital Institute (HCI) and Kelly Services to explore how Supply Chain Management principles can effectively be applied to Talent Management strategy in this challenging environment. Our research included a survey of 280 talent-management executives and professionals in HCI member organizations in spring 2011.

The survey explored how organizations understand and source talent, as well as their satisfaction with these processes and results.

We find that overall, only 20% of companies are fully satisfied with their access to talent. We also find that

organizations that are satisfied tend to be those that manage talent according to supply chain principles.

For most organizations, truly thinking about talent needs and acquisitions in a supply chain framework is a new idea. Just as a supply chain of raw goods and materials is managed in manufacturing, access to skill-specific talent can be effectively procured and managed using a talent supply chain. Both sides – the supply of talent and the demand for talent inside and outside the company- need to be diligently managed to find the right balance between open positions and the talent available to fill those roles.

Based on our analysis, we recommend three measures to improve and strengthen the talent acquisition process. Organizations must:

• Start acting and thinking like the market for talent has supply and demand competitive dynamics like any other.

• Analyze supply and demand internally and externally.

• Focus on getting real, robust and accurate talent information — not fragmented information from multiple and unrelated sources that have been used in the past.

5

exeCuTive Summary


1 Sullivan, Brian (Oct. 10, 2011). Need Work? U.S. Has 3.2 Million Unfilled Job Openings. cnbc.com.2 McDougall, Paul (July 29, 2011). Microsoft: Thousands of IT Jobs Go Unfilled. informationweek.com. 2011 HCI Research

A significant body of research demonstrates the importance of human capital to overall business performance — productivity, efficiency and the bottom line. However, fewer than a quarter (21 percent) of our survey respondents say that their organization’s business leaders are very satisfied with their ability to access talent when needed. Results for this measure and others were examined by geography, size of company, revenue and business sector, and they do not vary significantly by these factors. Selected data tables may be found at the end of the report.

What can explain this lack of satisfaction among business leaders with their ability to access talent? We believe that companies are not thinking about their talent needs in a comprehensive way.

aCCeSSing Skilled TalenT ChallengeS Today’S leaderS

6


how SaTiSfied are your buSineSS leaderS wiTh your organizaTion’S abiliTy To aCCeSS TalenT when needed?

“Very Satisfied”

All Others

21%

79%

7


A number of leaders in business and human capital have argued that talent can and should be managed the way that the supply chain of raw goods and materials is managed (i.e., managing for both need and uncertainty). In this view, a Supply Chain of Talent mindset and methodology has the potential to address the current shortcomings of the traditional methods of talent planning and acquisition.

Supply Chain Management argues that a network of interconnected business units must be effectively managed to ensure that inventory levels are consistent with consumer demand for them. Everything from the number of raw materials to the time it takes for products to be built, to where those products are distributed and how those products are consumed, must be clearly assessed, evaluated, and streamlined. The integration of each of these moving processes creates a chain of events that, when properly managed, improves the long-term performance of an organization and the supply chain as a whole.

The Supply Chain of TalenT — The new TalenT aCquiSiTion STraTegy

The Supply Chain of Talent leverages the principles of Supply Chain Management and applies them to talent management. According to Dr. Peter Cappelli of the Wharton School of Business, “An employer … would like HR to think about personnel from the perspective of money and costs, and what [would] happen if you don’t have the right people in place to do the necessary jobs.” Thus, effectively managing supply chains is principally about managing uncertainty and variability. “This same uncertainty exists inside companies. Companies rarely know what they will be building five years out and what skills they will need to make that happen; they also don’t know if the people they have in their pipelines are going to be around.”4

4 Knowledge@Wharton “Talent on Demand: Applying Supply Chain Management to People” February 20, 2008, knowledge.wharton. upenn.edu.

8


In this way, an organization’s most critical supply chain is its supply chain of talent. To effectively manage the supply chain of talent, organizations must obtain a clear understanding of when, where, and how their talent needs are being met. This is no small undertaking, though. “In most crises of supply and demand, we can manufacture a new supply. Whether it is oil, consumer goods or even money, ways are found to create more,” Jason Averbrook explains. “However, when it comes to individual skill sets, solving the supply and demand crisis is not as simple. And without visibility into what we already have, what we need, and where we will need it in the future, it’s virtually impossible.”5

The Supply Chain of TalenT — The new TalenT aCquiSiTion STraTegy

A key premise of supply chain management is the ability to look both inward and outward at raw materials, finances, services, and tools available — employing that information to build a strategy to create more value for both the producer and consumer. Applied to talent strategy and acquisition, a more comprehensive perspective on the supply and demand of talent is likely to improve access to high-quality talent. The current HCI/ Kelly Services survey design allows us to examine the degree to which organizations employ a Supply Chain of Talent framework, or the degree to which they examine the following:

• internal Supply — Who do we employ?

• internal demand — Who will we need?

• external Supply — Who is available?

• external demand — Who else is competing for this talent?

5 Averbook, Jason (June 27, 2011). The ‘New Normal’ of Talent Management. LRP Publications

The majority of organizations surveyed report that they study their internal supply of and demand for talent (79 and 72 percent, respectively). However, fewer than half (47 percent) consider and analyze the external demand for talent, and about one third (35 percent) fail to evaluate the external supply of talent.

Internal supply and demand information tends to readily accessible to organizations, while external information is more elusive. For instance, forecasting methods are often used within succession management plans and inter-organizational deployment opportunities, and that data can easily speak to overall internal talent supply and demand. Further, organizations can gather additional internal talent data as needed, tapping their succession plans, performance reviews and career development plans to gauge internal talent supply and demand.

The Supply Chain of TalenT framework in aCTion

9


doeS your organizaTion evaluaTe inTernal Supply of TalenT; projeCT inTernal demand for TalenT; evaluaTe exTernal Supply of TalenT; projeCT exTernal demand for TalenT?

NO

YeS

external Demand

external Supply

Internal Demand

Internal Supply

47%

65%

72%

79%

53%

35%

28%

21%

10


By contrast, evaluating the external supply of and demand for talent is considerably more difficult. Many organizations do not have the tools or data needed to obtain this information as routinely and quickly as they do for internal information. As the Figure 3 illustrates, few organizations report frequent use of any methods for gathering information about the external talent supply. At most, about one-third of organizations rely on the most popular sources, social networks such as LinkedIn (30 percent) and university career centers (29 percent). So, routine use of these methods certainly is not widespread. And even if it were, none of these methods employed taken alone can provide a holistic view of external talent pools.

The Supply Chain of TalenT framework in aCTion

how ofTen doeS your organizaTion uSe The following SourCeS To beTTer underSTand The availabiliTy of TalenT in a markeT?

LeSS OfteN (“OccASIONALLY” / “SeLDOm” / “NeVer”)

“frequeNtLY”

use social network sites, such as LinkedIn

Work with career centers at universities

conduct in-person events, such as open houses/orientations

conduct a market analysis including review of workforce demographics such as age, education level, unemployment rate, etc.

Work with search firms/agencies

Work with state employment agencies to identify types of workers in their pipeline that meet your needs

conduct a marketing campaign to evaluate potential workforce response/interest

contact with competitors/other companies to explore workforce synergies/sharing

30%

29%

20%

12%

9%

9%

6%

4%

70%

71%

80%

88%

91%

91%

94%

96%

11


Does it pay off for organizations to adopt the Supply Chain of Talent? We find that the answer is “Yes.”

In order to test our assertion that the adoption of a supply chain framework should improve an organization’s overall talent acquisition, we grouped our survey companies into two categories: Supply Chain of Talent Users and Non-Users. Our measure of the success of an organization’s talent acquisition is business leaders’ satisfaction with access to talent.

In this analysis, Supply Chain of Talent Users are organizations that report evaluating both the internal supply and demand of talent, while also assessing at least one external measure of supply or demand (or, at least three of the four elements deemed critical for Supply Chain of Talent success).

We found that slightly more than half (55 percent) of respondent organizations use the Supply Chain of Talent, while the remaining 45 percent do not.

uSe of Supply Chain of TalenT & buSineSS leader SaTiSfaCTion

breakdown of Supply Chain of TalenT uSerS & non-uSerS

Non-users

Supply chain of talent users

45%

55%

12


More importantly, organizations that employ a Supply Chain of Talent have a significantly higher rate of business leader satisfaction with access to talent.

These findings confirm that organizations with a more holistic understanding of what talent they need, where it comes from, and what factors influence it, are better positioned to access and obtain the types of talent they truly need to be successful. Supply Chain of Talent Users place a high value on understanding what drives the supply and demand of talent. And those that evaluate several, if not all, of the internal and external elements of talent supply and demand yield leaders who are more satisfied with their ability to tap into talent pools.

uSe of Supply Chain of TalenT & buSineSS leader SaTiSfaCTion

how SaTiSfied are your buSineSS leaderS wiTh your organizaTion’S abiliTy To aCCeSS TalenT when needed?

ALL OtherS

“VerY SAtISfIeD”

Non-users

Supply chain of talent users

6%

33%

94%

67%

13


Our research uncovers that only about 20 percent of business leaders are fully satisfied with the access they have to the talent they need. This fact is distressing alone, but even more troublesome when one considers the current structural unemployment in the U.S. – “unfilled jobs in the midst of mass unemployment.”6

A straightforward way to address the problem of insufficient access to talent is to redefine the strategy around talent acquisition and planning. Like a manufacturing supply chain, effective talent acquisition is a combination of knowing what the supply and demand for talent is — both inside and outside an organization. Talent supply chain analysis is a fresh approach to talent acquisition and planning, one that can help companies solve the talent paradox they find themselves in — a paradox that has led to companies with insufficient talent bench strength.

reCommendaTionS & ConCluSion

In order for organizations to improve and strengthen their talent acquisition process, we recommend the following:

• Start acting and thinking like the market for talent has supply and demand competitive dynamics like any other

• Analyze supply and demand internally and externally.

• Focus on getting real, robust, and accurate talent information — not fragmented information from multiple and unrelated sources that have been used in the past.

6 samuelson, robert, june 20, 2011, “why Are so many jobs going unfilled?” realclearmarkets.com.

14


When we examine business leader satisfaction with access to talent by geography, we find that leaders outside of North America are even less satisfied than their counterparts in North America are (fewer than 10 percent are fully satisfied).

a CloSer look: Subgroup analySiS

how SaTiSfied are your buSineSS leaderS wiTh your organizaTion’S abiliTy To aCCeSS TalenT when needed?by geographic region

ALL OtherS


North America

Other

total

23%

9%

21%

77%

91%

79%

15


Interestingly, no significant differences exist among industries, suggesting that frustration with talent supply is widespread.


how SaTiSfied are your buSineSS leaderS wiTh your organizaTion’S abiliTy To aCCeSS TalenT when needed?by industry

Other

22%

78%

tech

10%

90%

Professional Services

25%

75%

Non-Profit

17%

83%

Industrial Goods and Services

36%

64%

health care

25%

75%

Government

25%

75%

Banking/financial Services

14%

86%

ALL OtherS


16


For the most part, North American organizations and those located in other regions behave similarly in terms of assessing the external talent supply – with the exception that companies outside of North America are more likely to rely on search firms.

Overall, respondent companies report relatively limited considerations of the external supply of talent are limited. We do find differences among industries in the particular methods used. For example, professional services companies are particularly likely to rely on social networking sites such as LinkedIn, while health care organizations report relatively greater consultation with college career centers. Search firms are used to a relatively low degree in the government, health care, and health-care sectors.


how ofTen doeS your organizaTion uSe The following SourCeS To beTTer underSTand The availabiliTy of TalenT in a markeT? (percent answering “frequently”) by geographic region

use social network sites, such as LinkedIn

conduct a market analysis including review of workforce demographics such as age, education level, unemployment rate, etc.

Work with career centers at universities


Work with search firms/agencies

conduct a marketing campaign to evaluate potential workforce response/interest

conduct in-person events, such as open houses/orientations

contact with competitors/ other companies to explore workforce synergies/sharing

30%

9%

29%

9%

20%

6%

12%

4%

30%

9%

29%

9%

18%

7%

11%

4%

33%

12%

36%

6%

39%

6%

15%

6%

NOrth AmerIcA

Other

tOtAL

17


total Banking/financial services

govern-ment

health care

industrial goods & services

non-profit prof. services

tech

Use social network sites, such as LinkedIn 30% 36% 7% 25% 18% 17% 54% 33%

Work with career centers at universities 29% 14% 21% 54% 9% 6% 29% 33%

Work with search firms/ agencies 20% 25% 4% 7% 36% 0% 25% 27%

Conduct in-person events, such as open houses/ orientations 12% 4% 7% 25% 0% 17% 14% 3%

Conduct a market analysis including review of workforce demographics such as age, education level, unemployment rate, etc.

9% 4% 7% 14% 9% 0% 18% 0%


9% 0% 4% 18% 9% 17% 14% 7%

Conduct a marketing campaign to evaluate potential workforce response/interest

6% 0% 14% 7% 0% 0% 14% 0%

Contact with competitors/ other companies to explore workforce synergies/sharing

4% 4% 0% 7% 9% 6% 7% 7%

how ofTen doeS your organizaTion uSe The following SourCeS To beTTer underSTand The availabiliTy of TalenT in a markeT? (percent answering “frequently”) by industry


18


appendix a:reSpondenT demographiCS

induSTry organizaTion’S revenue number of employeeS

Industry Org’s revenue Number of employees Region Respondent’s Level Respondent’s Function

TechnologyProfessional ServicesGovernmentHealth CareNon-Profit/CharityFinancial ServicesBankingIndustrial Goods and ServicesInsuranceRetailMediaConstruction and MaterialsFood and BeverageOther (each <3% of total)

Less than $10 million$10-100 million$100-500 million$500 million-1 billion$1-10 billion$10 billion +N/A Government or Non-Profit

North AmericaAsia/PacificEuropeCentral/South AmericaAfricaMiddle East

Director/Senior DirectorManager/Middle ManagerTeam MemberVice President/Sr. Vice PresidentC-Level (CEO, CHRO, CIO etc), Executive/PresidentOther

Human ResourcesOperationsOther (each <3% of total)

Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +







Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +







Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +

19


appendix a:reSpondenT demographiCS

region reSpondenT’S level reSpondenT’S funCTion







Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +







Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +







Less than 1,0001,000-3,0003,001-5,0005,001-10,00010,000 +

20


Arnold, Chris (November 16, 2010). To Fill Job Skills, Firm Brings Training In House. npr.org

Averbook, Jason (June 27, 2011). The ‘New Normal’ of Talent Management. LRP Publications

Boudreau, John W. (January 7, 2008). Supply Chain Logic for Evidence-Based Talent Management. Marshall School of Business

Burns, Susan (December 12, 2010). Planning For the Future of Talent Acquisition: Meet the Talent Broker. talentsynchronicity.com

The Center for Association Leadership (March 15, 2011). Baby Boomer Retirement and Unretirement; Talent Shortages. The Center for Association Leadership

Coombs, Bertha (March 3, 2011). Jobs Go Unfilled Despite High Unemployment. CNBC.com

Guthridge, Matthew; Komm, Asmus B; and Lawson, Emily (January 2008). Making Talent a Strategic Priority. mckinseyquarterly.com

Kelly Services Marketing Information Department (July 2009) Global Contingent Labor Workforce Trends. Kelly Services

Knowledge@Wharton (February 2008). Talent on Demand: Applying Supply Chain Management to People. knowledge.wharton.upenn.edu

McDogall, Paul (July 29, 2011). Microsoft: Thousands of IT Jobs Going Unfilled. informationweek.com

Safani, Barbara (April 18, 2011). Six Job Skills in High Demand. jobs.aol.com

Samuelson, Robert (June 20, 2011). Why Are So Many Jobs Going Unfilled? realclearmarkets.com

Sokol Ratkiewicz, K., & Krekeler Weite, A. (July 2011). Connecting the Dots: Comprehensive Career Development as a Catalyst for Employee Engagement. Human Capital Institute

Sullivan, Brian (October 10, 2011). Need Work? U.S. Has 3.2 Million Unfilled Job Openings. cnbc.com

appendix b:workS ConSulTed

Talent

the term talent includes:

• fTe: full- and part-time employees who are part of the organization’s regular, traditional workforce.

• Contract Talent: full- and part-time workers and independent contractors who are not part of the organization’s regular, traditional workforce, including freelancers, temporary help, interim executives and consultants.

• outsourced services within an organization, i.e., a help desk or tech support desk.

internal Supply of Talent

the talent and skills of those currently employed by an organization, including ftE, contract talent and outsourced services.

21

definiTion of key TermS


external Supply of Talent

the number of potential workers within a given market, job classification or job type that are available to meet an organization’s hiring needs.

internal demand for Talent

A projection of the demand for certain skills and positions a company will need in a given period of time.

external demand for Talent

the aggregate figures of organizations looking to hire potential workers within a given market, job classification or job type. if demand for certain skill-based talent is high, it will be harder to find or attract this type of talent.

ABOut humAN cAPItAL INStItute (hcI)

the human capital institute (hci) is a catalyst for innovative new thinking in talent acquisition, development, deployment and new economy leadership. through research and collaboration, our global network of more than 138,000 members develops and promotes creativity, best and next practices, and actionable solutions in strategic talent management. Executives, practitioners, and thought leaders representing organizations of all sizes, across public, charitable and government sectors, utilize hci communities, education, events and research to foster talent advantages to ensure organizational change for competitive results. in tandem with these initiatives, hci’s human capital strategist professional certifications and designations set the bar for expertise in talent strategy, acquisition, development and measurement. www.hci.org

ABOut KeLLYOcG

kellyocg is the outsourcing and consulting group of fortune 500 workforce solutions provider, kelly services, inc. kellyocg is a global leader in innovative talent management solutions in the areas of recruitment process outsourcing (rpo), Business process outsourcing (Bpo), contingent workforce outsourcing (cwo), including independent contractor solutions, human resources consulting, career transition and organizational Effectiveness, and Executive search. further information about kellyocg may be found at kellyocg.com.

ABOut the AuthOr

As svp, centers of Excellence for kelly services, tErEsA cArroll is responsible for leading a team that manages the brand, develops solutions for clients, and supports kelly’s vision of providing the world’s best workforce solutions. .

exiT

http://www.hci.org

http://www.kellyocg.com