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Talent Management in the 2020s

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1 Talent Management in the 2020s
TDN 5th September 2014 Catherine Shepherd

2 Objectives for today Define talent management
Remind ourselves why talent management is important (to organisations and individuals) Identify future trends in work generally and talent management particularly Share practical tools, techniques, methods, hints and tips Discuss personal implications to us as coaches/consultants of future trends in talent management  What would you like to get out of "talent management in the 2020s"? As a freelance coach/consultant I would like to see greater use of coaching as a way of developing talent (in combination with other methods as appropriate) understanding how much of an issue it is. Do demographics mean that the war for talent is over? Best guess vision and expert predictions including the big issues for employers (internal & external) and discussion around likely solutions/strategy. - what talent mgmt can mean to different organisations; for example is it about identifying and developing high potentials/high performers to be future leaders (i.e. focused on a small, selected group) or is it about supporting all employees to be the best they can be (much broader) - sharing some success stories and unpicking what had made them successful - alternatives to the dreaded potential vs. performance grid Link with engagement. how organisations are identifying talent and how performance and potential fit into their definition of talent as well as current models, tools and techniques. For the organisations you have worked with how do they interpret "talent management"? I’m afraid this isn’t something I get into discussions with clients about, so can’t really help here in professional services, identifying individuals with partner potential and keeping them, managing the appropriately timed exit of everyone else I did not have visibility on this in  previous role, and to the extent a practice/strategy existed (even if unwritten/underdeveloped) my impression is that it probably leaned towards career development and retention of 'high performers' rather than looking to identify 'high potential' and being inclusive of all employees.   The recruitment strategy was probably reasonably developed and in line with business strategy/goals.   Succession and workforce structure forward-planning were, I expect, less considered and developed. They typically focus on what they need to achieve to have effective succession planning, both at the most senior levels of leadership (typically one down from board level), for those in management positions nearing leadership roles for those new to management or identified as potential future managers. What's your current/anticipated role with "talent management"? As above nothing significant, but want to keep up to date Not yet known, but hope to be very involved in the thinking on all areas mentioned above. generalist HR BP role rather than an OD role, my role is primarily to act as a conduit between the needs of the business and HR experts in talent management (as well as those in resourcing, learning, reward etc.). What models/tools/techniques can you share on the day (without breaking any client confidentiality)? None – hoping to learn from others at the meeting! N/A I won't be attending but from experience, formal development tends to focus more on potential and actual managers - performance management skills etc. - than senior leadership skills. Perhaps the assumption is that those in leadership positions need less help from HR as they are more self-sufficient. Or maybe management development interventions are just easier to implement than formal leadership development. The key things for me is to closely align talent management activities with the longer term plans for the business as well as the current business strategy.

3 What is “Talent Management”?
Over 7000 articles on talent management published 1990 to 2013, but only 100 in academic journals. Dries (2013). War for Talent, McKinsey consultants (Chambers, Foulton, Handfeld-Jones, Hankin & Michaels III (1998)).

4 What is Talent Management? Inclusive
“Succession planning and management is the process that helps ensure the stability of tenure of personnel. It is perhaps best understood as any effort designed to ensure the continued effective performance of an organisation, division, department, or work group by making provision for the development, replacement and strategic application of key people over time. Rothwell, W. (2005). Effective Succession Planning: Ensuring leadership continuity and building talent from within. AMACOM, New York “Succession planning sits inside a a much wider set of resourcing and development processes that we might call succession management. This encompasses the management resourcing strategy, aggregate analysis of demand/supply, skills analysis, the job filling process and management development (including graduates and high fliers). Hirsh, W. (2000). Succession Planning Demystified, IES Report 372. “Talent management is the process through which employers anticipate and meet their needs for human capital” Cappelli 2008b as cited in Thunnissen, M et al (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), Like the simplicity of the the third, but how is this different from HRM?

5 What is Talent Management? Exclusive
Talent management is the additional management processes and opportunities that are made available to people in the organisation who are considered to be talent. Chartered Management Institute & Ashridge Consulting (2007). Talent Management: Talent for business performance. Talent management is the systematic attraction, identification, development, engagement, retention and deployment of those individuals who are of particular value to an organisation, either in view of their 'high potential' for the future or because they are fulfilling business/operation-critical roles.
www.cipd.co.uk/hr-resources/factsheets/talent-management-overview.aspx “Talent management is the systematic attraction, identification, development, engagement/retention and deployment of those individuals with high potential who are of particular value to an organization” Davies and Davies 2010, as cited in Thunnissen, M et al (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), First one too simplistic. Second and third similar.

6 What is Talent Management? Exclusive
“Activities and processes that involve the systematic identification of key positions which differentially contribute to the organisation’s sustainable competitive advantage, the development of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated human resource architecture to facilitate filling these positions with competent incumbents and to ensure their continued commitment to the organization” Collings and Mellahi 2009, as cited in Thunnissen, M et al (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), “Global talent management includes all organisational activities for the purpose of attracting, selecting, developing, and retaining the best employees in the most strategic roles (those roles necessary to achieve organisational strategic priorities) on a global scale” Scullion and Collings 2011, as cited in Thunnissen, M et al (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), Although it’s long like fourth as it starts with organisation’s competitive advantage (covered more in next section). But what does “differentiated human resource architecture mean?” And people like distinguishing global as well ….fifth.

7 What is Talent Management?
Inclusive approach, employee as subject Exclusive approach, employee as subject Talent is the entire workforce Talent = human capital Talent mgmt = Human Resource Management Criticised that so broad meaningless Talent = small segment of workforce Selection of segment in terms of (potential) performance Criticised for self-fulfilling prophecy, too focused on individual, and high performance is not a talent Inclusive approach, employee as object Exclusive approach, employee as object Allows every employee to reach their potential Development of the talents of every employee emphasised Talent mgmt = Human Resource Development Selection of segment in terms of above average abilities and application of those abilities to deliver excellent performance Talent mgmt = giving employees who are highly capable and motivated opportunities to develop self Subject =talented people. Object = talent as characteristic of people (innate, mastery, commitment, fit). Inclusive (all employees). Exclusive (select group). Gallardo-Gallardo, Dries & Gonzalez-Cruz (2012). What is the meaning of ‘talent’ in the world of work? Human Resource Management Review, 23,

8 “Several authors have stated, however, that workforce differentiation is the key differentiating principle between talent management and strategic human resource management more generally”. Does it matter what the definition is? Dries (2013). The psychology of talent management: a review and research agenda. Human Resource Management Review, 23,

9 “When an organisation takes an object approach …more likely to see competence management and knowledge management as central practices. Organisations that take an subject approach … more likely to rely on succession planning and organisational career management”. Does it matter what the definition is? Dries (2013). The psychology of talent management: a review and research agenda. Human Resource Management Review, 23,

10 “While an inclusive approach to talent management is believed to lead to a more pleasant working environment characterised by openness, trust and overall employee wellbeing, the exclusive approach is assumed to to generate higher return on investment in terms of profit and productivity, brought about by increases in achievement motivation of star employees ”. Link to next section on “Why is Talent Management important” Dries (2013). The psychology of talent management: a review and research agenda. Human Resource Management Review, 23,

11 “Often the practice of leaving room for interpretative flexibility results in discrepancies between organisational discourse and practice … poses a serious threat to the reputation of HR practitioners as legitimate business partners”. Does it matter what the definition is? Dries (2013). The psychology of talent management: a review and research agenda. Human Resource Management Review, 23,

12 Why is Talent Management important?
War for Talent launched by McKinsey consultants in the 1990s: In knowledge economy human capital is a renewable source of competitive advantage Attracting and retaining talented people increasingly difficult with demographic and psychological contract trends - capacity risk: in Western economies baby boomers retiring but fewer young people entering workforce; in developing economies oversupply of young workers with necessary skills/experience - productivity risk: older workers on payroll may lead to motivation, productivity challenges etc. - organisations less able to offer stable, long-term employment so employees distancing themselves - talent scarcities shift the power from employer to employee

13 Why is Talent Management important?

14 Why is Talent Management important?
Companies with level 4 talent programmes: Generate A% more revenue per employees than their peers Have B% lower voluntary turnover amongst high performers than peers Were C% less likely to downsize during the 2008 recession than peers Bersin & Associates 2010 Investing in 16 talent management practices, as opposed to not, leads to: D% higher fulfillment of psychological contract E% less violation of psychological contract F% more commitment G% less turnover Tilburg University in cooperation with Accenture, October 2009

15 Why is Talent Management important?
Companies with level 4 talent programmes: generate 26% more revenue per employees than their peers have 40% lower voluntary turnover amongst high performers than peers Were 28% less likely to downsize during the 2008 recession than peers Bersin & Associates 2010 Investing in 16 talent management practices, as opposed to not, leads to: 27% higher fulfillment of psychological contract 34% less violation of psychological contract 13% more commitment 19% less turnover Tilburg University in cooperation with Accenture, October 2009

16 Why is Talent Management important?
Tilburg University in cooperation with Accenture, October 2009

17 Why is Talent Management important?
0.191 sig at 5% level Talent Management Psychological contract fulfillment Commitment Turnover intention +5.71 +3.35 +4.67 0.156 sig at 5% level Tilburg University in cooperation with Accenture, October 2009

18 Why is Talent Management important?
“Talent management is not an end in itself. It’s not about developing employees or creating succession plans, nor is it about achieving specific turnover or any other tactical outcome. It exists to support the organisation’s overall objective (which in business essentially amounts to making money).” Capelli 2008a, as cited in Thunnissen, Boeslie & Frutyier (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), Organisations should strive for societal goal of sustainability (diversity, social responsibility, human and employee rights, protecting the environment and contribution to the economy). Boudreau & Ramistad (2005) as cited in Thunnissen, Boeslie & Frutyier (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), To enhance organisational performance, organisations should focus on individual performance by means of increasing motivation, commitment and extra-role behaviour. Work and organisational engagement and alignment are indirect objectives of talent management. Thunnissen, Boeslie & Frutyier (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9),

19 Future of work and implications for Talent Management

20 PwC Megatrends CEOs (1) General (2) Demographic and social change
By 2050 the population of year olds will have decreased by 150m in China, increased by 317m in India, and will be larger in Nigeria than in the US. 60% 33% Shift in global economic power By 2020 China will overtake US as the largest economy. By 2030 E7 will replace G7 in terms of size and purchasing power. 59% 36% Rapid urbanisation By % of the world’s population will live in urban areas. 40% 26% Climate change and resource scarcity Global food demand predicted to increase by 35% by Proven oil supplies will last 50 years at current demand levels. 46% 39% Technological breakthrough 90% of data that exists less than 2 years old, only 0.5% analysed. In 2001 it cost $96m to sequence a genome, in 2013 $6000. ½ of jobs in US are in danger of being replaced by a computer in next 20 years. 81% 53% (1) % of CEOs (1314 surveyed Sept-Dec 2013) that listed megatrend as transforming their business in next 5 years. (2) % of 10,000 people surveyed in China, India, Germany, UK and US. What will transform way people work over next 5-10 years?

21 PwC Megatrends CEOs 63% are concerned about availability of key skills (c.f. 61% 2008, and 46% 2009) 58% are concerned about rising labour costs in high growth markets 93% recognise the need to change their talent strategy, but 61% haven’t started. Only 34% think HR are well prepared to capitalise on these trends (c.f. 56% finance to 28% R&D) General population Most important thing in a job for 44% is job security, for 29% take control of their career and do what they want when they want 65% of people want to work for an organisation with a social conscience 40% of people believe that traditional employment won’t be around in the future 46% of HR professionals expect at least 20% of their workforce to be temporary contractors by 2022

22 Demographic - PwC Millennials at Work
Born between 1980 and 2000 (?) By 2020 will be ½ of global workforce, although in short supply in countries with low birth rates 54% expect to have 2-5 employers ( %), 25% expect to have 6+ ( %) 72% feel they have made a compromise to get into work, with only 18% expecting to stay with their current employer long term First choice benefit = personal learning and development, second choice = flexible hours, third choice = cash. But 28% feel work-life balance worse than what they expected, and over 50% feel talk about equal opportunities is not delivered on 41% prefer to communicate electronically (rather than F2F or phone), 75% believe technology makes them more efficient. Many feel held back by outdated working practices Just over 50% attracted to employer because of their CSR position ( %), 56% would consider leaving if their values did not align ( %). 30% of Swiss respondents would not work in B&CM sector 4364 graduate responders in 75 countries to online survey All younger than 31, and graduated

23 Millennial and Work-Related Attitudes
Meta-analysis of 20 studies ( ) giving pair-wise comparisons across Traditionals, Baby Boomers, Generation Xers, Millennial. Nearly 20,000 subjects. Costanza et al (2012). Generationall differences in work related attitudes: A meta-analysis. Journal of Business and Psychology, 27 (4), Positive score older generation higher, negative score older generation lower. Mean differences for job satisfaction, – 0.46 for organizational commitment, – 0.05 for intent to turnover. Moderate to small differences, older generations may be slightly more satisfied, less likely to leave and may be more/less/no different in commitment. But … Age and tenure are positively correlated with job satisfaction (0.18, 0.12 after controlling for tenure). Age negatively correlated with actual turnover (-0.08 to ) Results for organizational commitment are mixed. Social dominance, conscientiousness and emotional stability tend to increase with age, and these traits are positively associated with job satisfaction. “Findings suggest that meaningful differences among generations probably do not exist on the work-related variables we examined and that the differences that appear to exist are likely attributable to factors other than generational membership.”

24 Millennials and Leadership
Centre for Creative Leadership (CCL) World Leadership Survey (2014): how much of each of the following characteristics helps make a leader effective?

25 Millennials and Leadership
“Contrary to popular belief, younger and older employees have very similar ideas about what makes a leader effective”. “Contrary to popular belief, younger and older employees have very similar ideas about what makes a leader effective”. “Be aware that the leadership challenge has less to do with generational differences and more to do with fostering behaviours such as showing consideration for others that produce desired outcomes for employees in all generations”. “Do not focus your resources on tailoring leadership and management solutions to specific generations”. Generations Xers Millennial Baby Boomers

26 Millennials and TM practices
Tilburg University in cooperation with Accenture, October 2009

27 Technology – “Like Curly Fries on Facebook. Then you’re clever”
Daily Telegraph Kosinski, Stillwell & Graepel (2013). Private traits and attributes are predictable from digital records of human behaviour. Proceedings of National Academy of Sciences of USA, 110 (15), Analysed data from US volunteers of Facebook “likes” (median 68) and personality tests. From relatively basic data estimate wide range of attributes that you assume are private: African v Caucasian American 95% Homosexual v Heterosexual male 88% Democrat v Republican 85% Christian v Muslim 82% Use of addictive substances 65%-73% Parental separation <21 years 60% Predictive accuracy of age r=0.75, size and density of network 0.52 and 0.47, openness 0.43, extraversion 0.40, intelligence 0.39

28 Other trends - assessment
Use of personality testing e.g. Five Factor Model Barrick, Mount & Judge (2011) reviewed 11 meta-analyses of personality and job performance: conscientiousness p around 0.3, emotional stability around p around 0.2, other traits important to some professions and some criteria Ones, Dilchert, Viswesveran & Judge (2007). Correlation of Big Five as set r=0.44 for counterproductive work behaviours, r=0.45 for organizational deviance Connelly & Ones (2010). With multi-rater assessment job performance correlations r=0.55 for conscientiousness and 0.37 for emotional stability. If 30% of job performance variance due to conscientiousness trait why wouldn’t organizations use this in talent assessment? Judge, Higgins, Thoresen & Barrick (1999). 60 year longitudinal study extrinsic career success correlation with 0. conscientiousness β=44, with neuroticism β=-0.21. Ng, Eby, Sorensen & Feldman (2005). Meta-analysis correlations for neuroticism and various career success measures are for salary, for promotions, for career satisfaction. For conscientiousness 0.07, 0.06 and 0.14 respectively.

29 Other trends – leadership development
Center for Creative Leadership (2011). Future Trends in Leadership Development: VUCA world: Volatile: changes happen rapidly and on a large scale Uncertain: future cannot be predicted with any precision Complex: challenges are complicated by many factors and there are few single causes Ambiguous: little clarity about what events mean and what effect they may have Need adaptability, self-awareness, boundary scanning, collaboration, network thinking Most common development methods are training, job assignments, action learning, executive coaching, mentoring, 360-degree feedback. Are these sufficient? More focus on vertical development (development stages that must be earned by oneself) Transfer of greater developmental ownership to the individual Greater focus on collective rather than individual leadership (needs open flows of information; flexible hierarchies; distributed resources; distributed decision making; loosening of centralised controls) Much greater focus on innovation in leadership development methods

30 Practicalities

31 These sort of frameworks link to Capelli’s quote on slide 18 – where is the link to the overall objectives of the organisation? Bersin & Associates

32 Bersin & Associates Bersin now part of Deloitte
Better link to business as “business alignment” at top and “business metrics” right hand side Bersin & Associates

33 PwC Talent Management Diagnostic and Framework
Increasingly seeing frameworks like this that start with business strategy, and output is “business value through talent”. But what about slide 18 Boudreau and Ramistad quote about societal objectives?

34 18 Operational Dimensions
Defining Developing Structures and systems Size of talent pool Development path Performance management Entry criteria Development focus Talent management processes Decision process Support Use of technology Permanency of definition Influence on career Systems flexibility Recruitment as a source of talent Connected conversations Ownership of talent Transparency Organisational values Risk Chartered Management Institute & Ashridge Consulting (2007)

35 Oh No - the 9 Box Grid Performance
How are ‘performance’ and ‘potential’ defined? If talent = competence x commitment x contribution how can this be assessed? (Ulrich & Smallwood 2012) How to assess which roles are strategic / pivotal? Assessment subjective: mini-me, politics etc.. Context: A player might look like B player and vice versa depending on circumstances Can past performance predict future performance? Self-fulfilling prophecies Fear of failure amongst “stars” Danger of resentment Performance Potential

36 Santander (Talent Conference July ’13)
Impact: Achievement Performance Comparison to external and internal peers Credibility: Capability Characteristics (learning agility/curiosity, intelligence, values, EQ, drive and resilience) Commitment Impact Team star Exceptional functional Exceptional org’l Team professional Strong functional Strong org’l Under achiever Potential functional Potential org’l Valued at what good at Specialists Potential to move x-function Credibility

37 Coca-Cola Enterprises (Talent Conference July ’13)
Performance trend over time Does not meet to exceeds Mastery Top talent Star Strong contributor Emerging talent Rising star Potential exit Placement issue Derailing Same brand Multiple jumps Potential

38 DDI Leadership Potential Factors
Sustained Performance + Leadership Promise Propensity to lead Brings out the best in people Authenticity Balance of Values & Results Culture fit Passion for results Personal Development Orientation Receptivity to feedback Learning Agility Mastery of Complexity Adaptability Conceptual thinking Navigates ambiguity = Growth Into Leadership Roles

39 Role of Corporate HR in Global Talent Management
Champion of processes: developing and monitoring practices, policies, strategies and tools. Very important in centralised functions, less important in decentralised. Guardian of culture: ensuring a culture of mobility across the organisation. Senior management and line manager support very important too. Manager of receptivity: encouraging the inflow and outflow of talent across business units. Again senior management and line manager support very important. Network leadership and intelligence: developing networks inside and outside the organisation to support the talent management processes. Important in both centralised and decentralised functions. Farndale, Scullion & Sparrow (2010). The role of the corporate HR function in global talent management. Journal of World Business, 45, : “Global talent management is not just systems and processes, but the need to encompass a talent mind-set across the entire organisation, enshrined in the organisational culture and practices”. “Different elements of a global talent management process can be intentionally embedded at different levels of the global integration – local response continuum”. Sparrow, Farndale & Scullion (2013). An empirical study of the role of the corporate HR function in global talent management in professional and financial services in the global financial crisis. . International Journal of Human Resource Management, 27 (9),

40 Conquering the Seven Myths of Global Talent Management
GTM is the joint responsibility of top management and corporate HR, as it is owned by management but governed by HR through the differentiated HR architecture When designing GTM systems, start with strategic positions: i) related to global strategy and have direct impact on implementation effectiveness; ii) high variability in performance depending on quality of people in position; iii) require unique firm, industry, local know-how. GTM systems should focus on placing and retaining A players in strategic positions regardless of where located. When relocating top talent, strive to offer access to physical and social contexts that are as similar as possible to home context. Develop a nuanced understanding of e’ee t/o: quality and roles of departing e’ees and the destination organisation (co-operator or competitor). Return on Talent measure should include quantitative and qualitative date, employee perceptions and objective indicators of talent performance Recognise the limitations of systems and processes aimed at standardised ratings of performance and potential. Use a number of different inputs (appraisals, 360, development centres, senior leader panels).

41 Conquering the Seven Myths of Global Talent Management
Practical implications for investment in GTM: Align GTM with global strategy Establish core and differentiated HR architectures for GTM. Differentiated focuses on pivotal positions, core focuses on rest of the organisation Differentiate amongst pivotal positions – which need A players? Review the role of corporate HR i) developing, implementing and measuring the effects of GTM ii) balancing global and local talent needs iii) making GTM a basis for employer branding through differentiation Minbaeva and Collings (2013). Seven myths of global talent management. International Journal of Human Resource Management, 27 (9),

42 Talent Analytics Six kinds of increasingly sophisticated talent analytics: Human Capital facts – what are the key indicators of my organisation’s overall health? e.g. JetBlue crew net promoter score predicts employee engagement and financial performance. Analytical HR – which business units, departments or individuals need attention? E.g. Lockheed Martin real time performance review data to identify areas that need improving. Human Capital investment analysis – what actions have the greatest impact on business performance? E.g. Sysco started with measuring employee satisfaction, retention, productivity, added in 7 other measures including supervisor effectiveness, diversity and quality of life. Workforce forecasts – how do I know when to staff up or cut back? E.g. Dow Chemicals models future workforce for 5 age groups and 10 job levels under various trends and “what if scenarios” Talent value model – why do employees chose to stay or leave? E.g. Google measures what both high performing and low performing employees value and designs interventions to support both Talent supply chain – how should my workforce change to adapt to changes in the business environment? E.g. predictions of call centre volumes and so hourly levels of staffing. Davenport, Harris & Shapiro (2010). Competing on talent analytics. Harvard Business Review.

43 Implications

44 So what? For us as consultants and coaches

45 References Center for Creative Leadership (2014). What makes a leader effective? US boomers, Xers, and millennial weigh in. Chartered Management Institute & Ashridge Consulting (2007). Talent Management: Talent for business performance. Clutterbuck, D. (2012). The Talent Wave: Why Succession Planning Fails and What to Do About It. Kogan Page Ltd, London. Dries (2013). The psychology of talent management: a review and research agenda. Human Resource Management Review, 23, Journal article covering definitions, contributions from different fields, and tensions between different perspectives. Minbaeva and Collings (2013). Seven myths of global talent management. International Journal of Human Resource Management, 27 (9), Journal article covering myths and how to conquer them. PwC 17th Annual Global CEO Survey: The Talent Challenge: Adapting to Growth

46 References PwC The Future of Work: A Journey to 2022 PwC Millennials At Work: Reshaping the Workplace Tilburg University in cooperation with Accenture, October 2009http://www.accenture.com/nl-en/Documents/PDF/Accenture_TMreport_A4_Brochure.pdf Thunnissen, Boeslie & Frutyier (2013). A Review of Talent Management: Infancy or Adolescence. International Journal of Human Resource Management, 27 (9), Journal article summarising 62 talent management articles from Good for definitions, outcomes and activities (at a very high level).


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