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
The Conference Board of Canada
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Session Outline


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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
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Session Objective
To provide
perspective and
stimulate thinking
about Talent
Management and
measurement in the
university context
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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.
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Working Group on Measuring Human
Resources Effectiveness
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Atomic Energy of Canada
Canada Customs &
Revenue Agency
Canadian Pacific Railway
Government of Ontario
Hallmark Canada
Hydro One Inc.
Imperial Oil
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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
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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
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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
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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
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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
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Talent Management...
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
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 peoplerelated practices to the strategic direction of the
business
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Characteristics of a Successful Talent
Management Organization
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Development mindset
Performance culture
Focus on “linchpin” positions
Senior leadership team champions talent
–
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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
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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.”
David Ulrich, University of Michigan
The Conference Board of Canada
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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
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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?
–
how can we enhance human capability to drive
results?
Leveraging people to achieve organizational goals
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Categories of People Measures
Efficiency
“What is the level and quality of HR practices
produced from the resources (time and money)
spent?”
Effectiveness
“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.
Impact
“What is the relationship between the changes in the
quality of the employees and our competitive
success?”
Source: John Boudreau and Pete Ramstad, HumanCapital Bridge ™
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Possible Learning & Development
Indicators
Efficiency
number of course hours taught
cost of training relative to number
of training hours per employee
Effectiveness
staff in pipeline with competencies
to step up
Impact
senior management and executive
vacancies filled from within
improved organization performance
– e.g., innovation, revenue
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Who is Using Metrics Strategically?
84%
While strategic use
of metrics is not
widespread today, it
will increase
12%
Source: The Conference Board Inc.
Measuring More Than Efficiency
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% reporting “high” use of
metrics to meet strategy
over past three years
% anticipating their
strategic use of metrics
will increase over next
three years
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
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Measuring Human Capital Value
HR Practices/
Org Strategies
Determinant I
Determinant II
Determinant III
Employee
Outcomes
• capabilities
• attitudes
• behaviours
Measures
Outcome 1
Outcome 2
Outcome 3
Human Capital
Value Driver
Organizational
Outcomes
Determinant IV
Determinant V
Measures
Measure 1
Measure 2
Measure 3
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•firm performance
•productivity
•customer sat
•turnover
•innovation
•quality
•safety
Measures
Outcome 1
Outcome 2
Outcome 3
Employee Engagement
Capture a bigger portion of the employee
mindshare
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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”
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What is Employee Engagement?
A Working Definition
Engagement 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
The Conference Board of Canada
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What is Employee Engagement?
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Multidimensional construct
Emotional attachment to, identification with and
involvement in the organization and the job
–
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emotional (affective commitment)
cognitive (thinking)
behavioral (action oriented)
Multiple attachments beyond organization,
including peers, supervisors, senior leaders and
customers.
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How Does an Engaged Employee Behave?
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Discretionary behaviour
– beyond what is required – extra-citizenship
behaviour
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Extra role behaviour
– helpful, voluntarism, sharing.
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Prosocial behaviour
– ethical, self-improvement, spreads good will.
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What Engages Employees?
Perceived Organizational Support
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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 wellbeing.”
“I have the resources I need to do my job well.”
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What Engages Employees?
Perceived Supervisor Support
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Perceived care and concern exercised by a manager for the
well-being of his/her reports
–
–
–
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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.”
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What Engages Employees?
Nature of the Job/Perceptions of Competence
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The extent to which the job includes core job characteristics
such as variety, significance, identity, feedback, and
autonomy
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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.”
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What Engages Employees?
Rewards, Recognition and Opportunities for Growth
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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.”
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What Engages Employees?
Sense of Fit and Belonging
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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.
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–
–
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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.”
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What Engages Employees?
Perceptions of Justice and Fairness
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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.”
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Model of Employee Engagement
Rewards
Organization
Support
Employee
Outcomes
Supervisor
Support
Employee Engagement
Job and
oOrganization Fit
Organization
Effectiveness
Job
Characteristics
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Justice/Fairness
Self
Actualization
Remember Maslow?
Growth
Affiliation
Providing for employees’ natural
needs
Self Esteem
& Worth
Basic Needs
Basic Needs
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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
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Leadership
The “difference maker” in a turbulent, competitive
marketplace.
John Wetmore, Former CEO, IBM Canada. Ltd.
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There is a Perceived Crisis in
Leadership
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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
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The Essence of Leadership has
Fundamentally Changed

Leaders must still deliver results
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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 al
Building the Leadership Pipeline
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Building a Leadership Pipeline:
Implications for HR
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Develop internally—buying may not be an option
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Update curriculum
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Update approach to learning
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Boost emphasis on middle and first-line managers
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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
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A Model of Leadership Effectiveness
Employee
Outcomes
Leadership
Development
Leadership
Capabilities
Leadership
Effectiveness
Organization
Outcomes
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Leadership Culture Audit Tool
Three parts of LCA tool reflect three stages of the model:
Leadership
Development

key training and other development
activities that foster leadership
capabilities
Leadership
Capabilities

attainment of critical skills and
competencies; influenced by selection
and development practices
Leadership
Effectiveness

executing on the tasks of leadership and
achieving tangible results that drive
organizational performance outcomes
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Begin with the end in mind...
LEADERSHIP
DEVELOPMENT
For Example
Coaching and mentoring

LEADERSHIP
CAPABILITIES
For Example
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Special work assignments

Assessment
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Development plans

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
Communicating and
listening
Planning and decisionmaking
Motivating others
LEADERSHIP
EFFECTIVENESS
For Example
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High trust levels
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Employees feel valued
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Increased innovation
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Organization successful,
more competitive
What Do Effective Leaders Do?
Capitalizing on employees’ talents
and capabilities
 Changing and developing culture

Building and leading teams

Enhancing organizational performance

Providing clear objectives

Achieving unit goals
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Nurturing stakeholder relations
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Managing creative talent
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Increasing speed and flexibility

Gaining employee commitment

Increasing innovation

Making employees feel valued

Building/maintaining a strong top

Generating enthusiasm, pride and loyalty

Defining corporate purpose (vision
mission, values)

Identifying long term opportunities

Building Trust
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
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
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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
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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
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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:

How Effective?
 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
 HR helped organization achieve its objectives
 HR strategy and associated practices have contributed to
organization success
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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?

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attracted and hired the best talent available
optimal training and development of workforce
critical talent retained
workforce is a key driver of organization success
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TMI—Process and Practice
Dimensions
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Human Capital Acquisition
Performance Management
Incentive Compensation
Learning and Development
Career Management
Employee Support and Wellness
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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
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An Example—Talent Acquisition
How 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
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TMI—Talent Acquisition
How 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
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TMI—Talent Acquisition
Sample Metrics
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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
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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
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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!
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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.”
David Ulrich, University of Michigan
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Thank You !
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