Perspective - Fall 2009 |
By Brian Wilkerson with Watson Wyatt Hong Kong Talent Management Team
LEADING COMPANIES have begun to account for different dynamics of talent that are affecting them now and in the future.
A recent Watson Wyatt survey, Effect of the Economic Crisis on HR Programs, polled 175 companies and found that a majority of employers are more concerned about retaining their top performers and critical-skill employees than they were before the economic crisis hit in September 2008.
To keep employees engaged, a large majority of employers (83 percent) are beefing up their communication programs. This is in line with our 2008/2009 WorkUSA/WorkAsia study, which reported that employees are 20 times as likely to be highly engaged and 50 percent more likely to be top performers when they feel the organization consistently communicates and delivers on an employment deal that is attractive and aligned with customer-facing messages.
One big difference between the 2001 recession and today is a scarcity of certain skills and people. During this recession, some companies simultaneously conducted layoffs for certain positions, while continuing to recruit key talent in some technical and high-skill areas.
Keeping high-performing employees engaged in down times is challenging. Decreased benefits and increased responsibilities can weaken employee loyalty. Demographic shifts and retirement issues have not disappeared because of the recession. Plus younger workers expectations for advancement opportunities and pay are perennial talent issues.
Organizations must shift talent management away from being an HR program
toward a data-driven, line-owned core business process. This type of
approach yields tangible benefits,
as shown in Figure 1.
Employers need to segment their talent pools and invest differently in each segment.
A company must examine the different ways it can analyze and group its talent. Only then can the right program be implemented for that segment, ultimately resulting in stronger employee engagement, talent retention and corporate profitability.
Case Study
For years, ABC telecommunications firm had spread development money and
compensation evenly over its 8,000 employees for fear of losing staff if it
differentiated rewards. But when the recession came and money got tight,
company leaders knew they had to make a change. They began by segmenting
their talent into four buckets: business impact, high performers, high
potential and critical skills. Then they shifted their dollars away from low
performers and those not making an impact. While the company lost some low
performers, the high performers and high potentials felt like they finally
received recognition for their performance and contribution and remained on
the job.
Although there is no right way to segment one's talent it is important to ensure that your segmentation drives the appropriate long- and short-term investments and results.
Companies need to measure the outcomes that affect business success.
Everything is measurable, and every worker affects results one way or
another however performance management is often poorly measured. Companies
invest a great deal of energy in goal setting, but not enough in making sure
individual goals align with company goals. Companies need to define and
determine the correct goals particular to the business they are in.
Cascading goals - first setting business unit goals, then executive goals,
on down the line - allow managers and employees to see how their individual
efforts directly affect business performance. This allows employees to
understand what the desired outcomes are before they write their goals and
how achieving these goals can have direct business results.
A disciplined analysis and approach is required of people in organizations. By looking at who is hired, what skills they possess and who is successful, companies can create talent profiles that can determine the right people for the organization. Companies need to understand (and managers need to be taught) what data make a difference in terms of selection, promotion and rewards. Workforce planning has become a process with large amounts of data, deep statistical analysis plus simulation and optimization Organizations that are taking this approach are finding significant gains in cost reduction, revenue improvement and customer satisfaction.
Case Study
Large, global XYZ pharmaceutical company recently analyzed its talent
management program for measurable impact. The firm assigned a group of
managers to review all 14 of its talent management processes and the
different data elements collected. If the managers could not tie a process
to its tangible impact on business performance, they eliminated the program.
Those programs that could be tied to business performance were then
massively simplified. Across the organization, the company went from having
14 separate programs to just three, simpler processes.
Human resources is often hesitant to sign up for these types of measures, rightly pointing out that many factors affect whether or not these metrics are achieved - and that line managers have a significant impact on these metrics. While this is true, it is no different in any other part of the business. Sales does not control every aspect that influences whether a sale is made or not, yet that function is accountable for sales results. HR must be a key driver of effective management and effective managers within the organization-Shifting to this measurement-driven approach is fundamental to ensuring that talent management makes a real difference in the organization.
Leading organizations have adopted a new set of competencies and skills that go beyond a person's current position: strategic thinking and planning, crisis management, judgment and decision making, tolerance of ambiguity, and agility to effect rapid change. This focus on adaptable skills requires a significant shift in learning and development, but also in other processes such as recruitment, selection, promotion and succession. All of these new competencies are measurable, adaptable skills that can serve entry-level employees as well as senior management, and are transferable as employees move up within an organization.
A Watson Wyatt global research study focused on these competencies. Among the Fortune 500 companies surveyed, remarkably consistent themes emerged. Companies are shifting from a reliance on traditional skills and competencies to more flexible and adaptable skills.
Goal setting and performance management are the two most direct ways for management to communicate with employees about objectives. Performance management helps clarify an employee's role, while focusing employee development on competencies that determine the organization's success. Finally, by linking reward outcomes to individual performance, effective performance management allows employers to realize their philosophy surrounding pay for performance.
Data about productivity and revenue achievement also drive back into workforce planning.
Talent challenges in the past have led to a number of innovations that are helping companies today show the impact of effective talent management on the bottom line. Companies that can transform the current challenges into an opportunity will be the leaders coming out of this recession.
For more information about the "5
Rules of Talent Management" or to obtain a copy of the full length paper,
please contact Deirdre Lander, Head of Human Capital Group, Hong Kong,
email:
deirdre.lander@towerswatson.com
The huge upheavals businesses have undergone to survive the recent turbulent economy have had a significant impact on established organization structures, roles and processes, leaving many employees "disconnected" to the business, according to consultants Watson Wyatt.
The threat or reality of redundancy programs, combined with reduced or frozen pay, has left many employees more focused on their own short-term futures than on the long-term prosperity of their companies. To begin functioning optimally and in order to take advantage when the business climate improves, companies need to reconnect employees to the business.
Watson Wyatt suggests 10 practical steps to reconnect employees to a business. These involve employers focusing on a number of key operational priorities to get their organization on a firmer footing to ensure that its structure, strategy, systems and culture are positioned to deliver maximum business performance.
The 10 practical steps to reconnect employees to a business are:
"The business imperative to make significant changes quickly has knocked many organization and employee reward structures out of shape," said Deirdre Lander, Head of Human Capital Group in Hong Kong. "But those companies able to reconnect their employees and move their organization structures and processes back on track will be the ones best positioned to take advantage as and when the business climate improves."
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