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Best Feet Forward

The recession and sluggish recovery have redefined priorities and created even more of a demand for workforce analytics in determining future recruiting and talent-management plans. (The third of a three-part series)

Monday, November 1, 2010
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As famed author George Santayana wrote in his 1905 masterpiece The Life of Reason: Reason in Common Sense, "Those who cannot remember the past are condemned to repeat it."

Though the Spanish-born American philosopher wasn't referring just to business, and certainly not to what would eventually become human resources, his words could resonate today within the HR world, as post-recession recruiting and talent-management challenges abound, and past strategies may no longer work.

According to some experts, there are ways to plan for future recruiting needs, but it will take more effective, focused and data-based approaches to ensure that the best possible talent is filling the pipeline.

For example, Chicago-based Ravin Jesuthasan, managing director and leader of the global talent-management area practice at Towers Watson, says one key change includes the transformation of the traditional organization pyramid and the evolving mix of full-time employees versus contractors versus part-timers. He says these changes are precipitated by a desire to reduce fixed costs as organizations plan for future talent needs in today's economy.

Jesuthasan says analytics are essential for providing insight into the specific type and quantity of talent required for pivotal roles in an organization, the current internal pipeline of talent for those roles and potential external talent sources in various global markets.

"With many of the changes taking place today, recruiting becomes a multifaceted process," Jesuthasan says. "Employers are trying to figure out how many people and what skills they really need. It means taking a scalpel to a problem that used to require a machete."

Jason Jeffay, a partner in Mercer's human capital business and global leader of the firm's talent-management consulting practice, says the downturn has forced organizations to make fairly dramatic changes to their workforces and talent programs.

During the recession, companies obviously downsized their workforces, changed/reduced benefit programs and cut back on investments in training, leadership development and careers -- and these changes, not always executed with effective change-management strategies, decreased levels of employee engagement and commitment.

Coming out of the recession, employers are looking at a number of challenges, including future talent-pipeline disruptions (by downsizing and delayed retirements), potential gaps in people who will be ready to step up to new roles or take on new responsibilities that generally occur during growth, and the need to do more analytical modeling and workforce planning to determine how quickly they can grow their workforce in response to market improvements.

"Employers are planning further talent-management and recruiting changes, but the aim is not to revert to what they had done before the downturn," Jeffay says. "It's a different business environment now. Talent programs need to be reviewed and tailored to fit this new reality."

What is the new reality? Todd Safferstone, a managing director with The Corporate Executive Board's Corporate Leadership Council, says one major recession-fueled and future challenge is the lack of quality candidates, as many potential employees do not possess the right skills sought out by many employers.

"The average number of applicants has increased by 128 percent over the past three years," Safferstone says, adding that, while that might sound like good news, qualified applicant numbers have actually declined significantly. In fact, 83 percent of HR departments report that fewer than half of applicants possess even very basic qualifications, he says.

Safferstone says many corporate recruiting departments still face finding the proverbial "needle in the haystack" -- but the haystack is bigger now and the number of needles, aka quality hires, is relatively the same, though even harder to find.

New York-based Elizebeth Varghese, senior vice president and leader of Aon Consulting's Talent Solutions Practice, says that, while economic conditions are a factor for future talent-management planning, two other key challenges are demographics (the generational shift to a younger, less-experienced workforce as baby boomers retire), and the dispersed geographical, more virtual aspect of future workforces.

"HR needs to use workforce-planning tools with both HR and business data to provide meaningful results in recruiting," she says. For Varghese, meaningful results equate to insights and information about whether HR investments really provide ROI and drive business results, or about whether HR programs result in choices employees care about.

"A company may mistakenly be investing heavily in a benefit program that might not be a big factor in attracting or retaining certain talent," she says. "Using analytics and data to make these decisions is much more valuable."

Nina Ramsey, senior vice president of HR for Kelly Services, the Troy, Mich., global staffing provider, says her company faces those competitive pressures as it hones in on its primary business objectives.

As a result, talent-management planning, both internal (the company has 8,000 employees) and external with its contract workforce, is a critical success factor (although the company is not using workforce analytics technology -- at least not yet).

"Our executive team is focused on our overall strategy," Ramsey says. "We need to focus on where we are heading and what we want to be known for as a company."

To that end, she says, Kelly Services' main thrust as an HR service provider is to broaden beyond its long-time staffing models with a suite of products, including business-process, recruitment-process and contract-worker outsourcing. So Kelly Services has been assessing its current talent capabilities -- mainly experience and employee career desires -- and determining what the overall talent needs will be and how they match up with what exists.

"We've taken a targeted approach to looking at pivotal talent, which means looking at jobs that have the most impact on growth," Ramsey says. "Many of these are customer-facing positions, so we are looking at those very carefully to see whether the job skills and roles are defined appropriately to meet customer needs."

 

Focused and Pivotal

Melinda Rogers, vice president of human resources at CCLC, a Portland, Ore., national child-care provider that operates more than 108 employer-sponsored child-care centers in 18 states, leads a team responsible for attracting and retaining talent for CCLC's 3,000-center employees and teachers across the country.

"Our selection process has been developed with the goal of hiring teachers who will grow with our organization and thrive in long-term teaching careers," Rogers says. "We use a combination of criteria that distinguish them as high-caliber early childhood education professionals."

Of course, very large employers have more complex talent-planning needs than a CCLC or Kelly Services. According to John Boudreau, professor of management and organization at the University of Southern California's Marshall School of Business and the research director at USC's Center for Effective Organizations, workforce planning at many of those larger enterprises has not been managed with enough emphasis on analytics and data (which was also true of supply-chain management until relatively recently).

Boudreau, in fact, believes the future of talent management and workforce planning lies in understanding analytical frameworks that are used in other parts of the business -- such as supply-chain, marketing and finance.

Recruitment, hiring, training and career development lend themselves to traditional supply-chain analytics techniques, he says, and managers can use these techniques to determine how much talent the organization will have, and who should join, stay, leave or be redeployed.

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"Talent management is like supply-chain management because people have finally come to realize how pivotal the former is," Boudreau says. "Managing talent effectively has always been possible, but the payoff was not considered as important as other business issues."

Boudreau says leaders don't typically think of turnover as they would depleting and replacing inventory on a warehouse shelf, "but the similarities are there, and so are solutions and strategies," he says.

On a micro level, CEB's Safferstone says, recent research from his organization analyzed how the best corporations have responded to new, emerging labor-market realities; it found that -- as a result of today's organizational and labor-market complexity -- recruiter capabilities matter much more now in determining the quality of new hires.

"Recruiters who go beyond process mastery to build candidate pipelines and strategically advise hiring managers, what we call talent advisers, are able to drive business results despite the challenging environment," Safferstone says. Yet, he adds, a relatively low number of recruiters today qualify as talent advisers.

Over the next three to five years, as the labor market continues to fragment and applicant loads continue to grow (while so-called "passive" candidates stay on the sidelines concerned about uncertain economic trends), recruiting functions will face even tougher challenges in meeting hiring-manager expectations. Recruiting, says Safferstone, also will have more internal complexity because, as organizations have rapidly changed in recent years, it's tougher for hiring managers to decide what they want talent-wise.

Based on a recent Mercer study, called Future of Talent, employers certainly seem aware of these upcoming talent-management challenges. Conducted in May, the survey questioned 400 HR and talent-management leaders in the United States. It found that 51 percent of respondents rated talent management as a top priority at their organization today, and 76 expect it to be a top priority within the next three to five years.

According to Haig Nalbantian, a Mercer senior partner, in the early '90s, Mercer began the use of dynamic workforce modeling to uncover, measure and understand the factors that shape an organization's workforce to project how that workforce would evolve over time.

But while this methodology was mostly used in the past to address discrete issues of turnover, leadership development, optimal rewards allocation, etc., today Mercer is experiencing increasing demand to apply this methodology in support of workforce planning.

"Organizations want to know where current dynamics are taking them and how specific changes in market conditions or in their own management policies and practices are likely to alter the future composition of their workforces," Nalbantian says. "With analytics, they can do that, and also narrowly focus their recruiting efforts to close any gaps."

For instance, he says, employers can measure the sensitivity of employee- turnover decisions to changing labor market conditions and anticipate the effect of such changes when retirement-eligible employees choose to exit the company. This can give them a clearer picture of "if, where and when" talent gaps are likely to emerge -- whether employers are at risk of losing experienced experts in specified areas, or whether bottlenecks in career opportunity for new talent are likely to undermine their ability to attract and retain the new capabilities they require.

"They can use the statistical modeling results to determine what changes in retirement-program design are likely to induce desired choices around retirement," he says. "Traditionally, decisions about such programs are driven solely by cost considerations -- based on calculations coming out of Finance.

"In the current competitive landscape, companies ignore workforce impact at their own peril," Nalbantian adds. "Many more understand that. The result will be a surge in the demand for more sophisticated workforce analytics to support decision making."

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