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Holding On to Your Flight Risks

Whether the economy goes up or down, top-performing employees will always be in demand. How can talent-management systems help you hold on to yours?

Friday, September 16, 2011
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For most people, the economy continues to be adrift in rough seas. Those lucky enough to be employed are generally holding fast to their jobs as if they were life preservers. But top-performing employees may be clinging to them a bit less tightly, because they know they have options.

At Cincinnati-based Chiquita Brands International, top performers get great results year after year, regardless of market conditions in the volatile food business. At AMD Corp., they're the employees who have a proven ability to thrive in whatever area of the far-flung technology firm they're sent to. And at Ciena Corp., top performers not only meet or exceed their goals for at least three years in a row, but they exhibit the ability to quickly master new skills at the increasingly global company.

Top performers are, in short, the workers who -- more than anyone else -- determine whether your organization will thrive, survive or join the long list of failed businesses that are little more than some faded letterhead and distant memories. And they're getting restless.

PricewaterhouseCoopers Saratoga's 2011/2012 U.S. Human Capital Effectiveness Report found that among employees overall, the voluntary separation rate -- which represents both retirements and resignations -- has continued to trend downward, from 10.4 percent in 2007 to 7 percent in 2010.

However, the trend is moving in the opposite direction for employees rated as high performers, with turnover rates among this segment increasing from 3.7 percent in 2009 to 4.3 percent in 2010, according to the report, which is based on proprietary information from more than 300 U.S. companies in 12 industry sectors.

Amid this churn, it might be prudent to ask yourself whether you have a plan for developing and retaining your organization's existing top performers, not to mention those who exhibit the potential to become ones. But do you even know who they are? Based on the latest research, there's a good chance you don't.

A survey of 426 business leaders from companies of various sizes and industries by the Seattle-based Institute for Corporate Productivity and Human Resource Executive® earlier this year found that only 9 percent strongly agreed that they do a good job of identifying and tracking high-potential employees.

Just 20 percent agreed or strongly agreed that their organizations have formal, transparent processes to identify and develop hi-pos.

"Most companies either don't have a standard definition of what top talent is, or they lack a common talent-management strategy as to how to retain these people," says Jason Averbook, CEO of Minneapolis-based consulting firm Knowledge Infusion. 

What's needed is for HR leaders to pull together all the functional areas of HR to ensure the department is working in tandem to identify, develop and retain top performers, he says.

Taleo's James Harvey, vice president of the Dublin, Calif.-based technology vendor's talent-management products division, agrees.

"Until HR begins to unify or better coordinate the functional centers of excellence, it's going to have a hard time solving the retention of star performers," says Harvey, who recently spent some time in a room with HR leaders from some of the world's largest companies, all of whom expressed concerns about losing top talent. "It's not a problem that one center of excellence, like compensation or recruiting, can solve -- they have to be coordinated."

At most companies, the process for identifying and retaining top talent is (if it exists at all) slow, ineffective and often focused on the wrong things, says Jason Jeffay, Mercer's global leader for talent-management consulting.

"To begin with, HR is too often focused on hierarchy instead of critical roles," he says. "When [HR leaders] do identify top talent, they tend to offer more money as an incentive to stay, which rarely works. Finally, they're not proactive enough. They tend to wait too long, by which time the person already has his or her foot out the door, and HR is left scrambling. It's a needlessly expensive and stressful approach."

Keeping top performers from becoming flight risks isn't rocket science, says Jeffay. It usually boils down to simply letting them know that their contributions are recognized and that the company is making a serious effort to equip them for opportunities that will make it worth their while to stick around.

Talent-management systems can be a big help in this area -- or a colossal waste of valuable time and money, say experts. Digitizing processes that never worked well in the first place, installing complex software that managers find every excuse in the world to avoid using and relying on systems that aren't connected to the rest of the business is a sure recipe for failure, they say.

Early Alerts

Retaining top performers is too vital to be left to once-a-year conversations, says Gretchen Alarcon, Oracle Corp.'s vice president of human capital management strategy.

"During the compensation review, everyone is suddenly very interested in their team and making the best use of their budget, but that's a once-a-year event," she says. "People make decisions on a daily basis on whether they're going to stay with a company."

Alarcon touts the predictive analytics tools embedded within Oracle's new Fusion HCM release as an "early warning system" to help companies identify their most important flight risks before they actually fly the coop.

Oracle worked with PwC Saratoga to develop the algorithms underpinning Fusion's predictive analytics, which look for patterns within a client's HCM data to uncover high-performing employees who may be thinking of changing jobs.

"It can make connections between things that may not be obvious, such as how long the person has been in his or her grade, how long [he or she has] worked for a particular manager or whether their salary is below market," says Alarcon.

By alerting managers to flight risks early on, the system gives them the opportunity to take preemptive action -- say, bumping up a scheduled pay raise or offering them a new development opportunity, she says.

Users can also perform "what-if" analyses, such as: What if I gave this person a salary adjustment or transferred her to a different group -- how would that affect her predicted performance?

If that person is a top performer, what am I doing to optimize his performance?

Other HR technology vendors, including Taleo and Kenexa, promote "talent profiles" as an effective means to hold on to key employees. The talent-management tools within Kenexa's new 2x platform can compile information throughout employees' entire lifecycles -- from the time they first apply for a job through their latest performance review, along with courses completed and career goals -- to create a "unified talent record," says Eric Lochner, Kenexa's president of global talent management. 

Because 2x is a unified platform that can span all HR functions, information entered into the unified talent record by employees and their managers can be used to alert the company's recruiters whenever a position opens up that matches a particular employee's career path and qualifications. This can ensure high-potentials don't get inadvertently passed over and end up leaving in frustration, says Lochner.

In addition to talent profiles that are similar to those provided by Kenexa, Taleo promotes its "business intelligence" service, which can flag cases in which an employee with a high performance rating has a low compensation ratio and push it out to line managers, says Harvey.

Managers themselves can also input their own flight-risk concerns, which can be flagged and sent to higher-ups in the organization directly via their BlackBerrys or iPhones, he says.

"Our goal is to take talent management and put it into the tools people use everyday, rather than forcing people to come into our applications," he says. "We need to push this information out to them."

Finding Red Flags

At Linthicum, Md.-based Ciena Corp., finding and cultivating top talent early on has grown ever more important as the builder of high-performance network systems expands globally.

The company had been using Excel spreadsheets to conduct talent reviews and manage succession planning, says Alana Palmer, director of executive and professional development. But when Ciena quickly expanded from 2,000 employees to 4,000 following its 2010 acquisition of a division of the bankrupt Nortel Corp., it realized it needed something better, she says.

"It's one thing to manage and review your talent when you're a smaller organization, but when you double in size overnight, it's quite another," she says.

The company wanted an easier way to spot and develop its high-potential talent early on in their careers. It selected CLCPro-High Potential, a new product from the Roslyn, Va.-based Corporate Executive Board, to help it do just that.

"One of the features that was quite attractive to us was the interactive nine-box matrix," says Palmer, "which enables us to do real-time scenarios during talent-review meetings with managers -- it gives you a common view of how you're moving people across the board and ensures consistency in how we're developing them.

"We'd been using the nine-box previously, but being able to do it interactively is much more powerful than a static model," she adds. 

Ciena's HR department will measure the success of the new tool based on its latest cohort of high potentials and how quickly it can conduct comprehensive talent reviews, says Palmer, adding that the initial cohort will consist of 200 people.

Usability will be another test, with HR closely looking to see whether managers are actually using the tool to track the developmental activities of their direct reports and filling out evaluations.

"Just working with knowledge workers, there's a constant effort to track and retain the high performers," she says. "For us, it's really important to develop our emerging talent and create a pipeline to fill [critical] positions."

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At Chiquita Brands International, the Cincinnati-based fruit-growing and distribution company has turned to a system from Workday to help it identify and develop the top performers among its several thousand professional-level employees, out of a total population of 21,000 workers spread over six continents.

"We have a volatile business," says Jeni Fitzpatrick, Chiquita's HR director. "Many employees can have a great year, but we want to find those who sustain great performances year after year."

Gathering multiple years of performance history concerning goals achieved, targets met and feedback has been easier since Chiquita signed on to a global system from Workday in 2008, replacing a hodgepodge of different systems it previously used to keep track of its people.

Prior to Workday, the company's payroll system was used primarily to track employees, but it couldn't tell Fitzpatrick and her team how people had progressed in their roles and whether they were ready to take on new responsibilities.

"We're using Workday to capture what people are setting as their goals for the year, using that information to facilitate a mid-year career dialogue with that person and then use the information captured to fuel the performance-calibration discussions we have at the end of the year," she says.

With the new system, managers don't have to go hunting and pecking at their keyboards or calling HR for information -- it's already been captured, she says. HR has added tips and talking points to ensure the discussions between managers and their direct reports are as productive as possible. "It's not that managers don't want to do this well, but there are time constraints," says Fitzpatrick.

She credits the new system with making it easier for managers to prepare for those discussions.

"It's given managers the ability to have a meaningful discussion about succession, in a way that isn't labor-intensive to prepare for," she says. "It lets them do the stuff worth doing rather than turning this into an administrative process."

The system has also helped HR determine where breakdowns may be occurring, says Fitzpatrick. If an employee or manager isn't setting goals, that in itself can be a red flag, she says, whereas before, HR wasn't able to determine this when it had to chase pieces of paper around.

Goal-setting has also revealed organizational weaknesses that might otherwise have gone undetected, she says. In some cases, employees had difficulty setting goals because the managers above them hadn't done a good job of cascading the organization's objectives to the rest of the workforce.

"Employees were saying, 'I want to set proper goals, but I don't know where we're headed,' " says Fitzpatrick. "If we hadn't been using this system, those employees would have continued doing good work, but they would have been rowing in the wrong direction."

Turning the Light On

At AMD Corp., talent information was nearly forgotten once it was collected and entered into the company's homegrown HR system.

"The system wasn't very user-friendly, was overly complicated to use, and nothing was ever done with the data once we got it," says Ron Miller, director of HR operations at the San Jose, Calif.-based semiconductor manufacturer. Other than being used as a reference point for promotions, the data simply sat there, he says -- it wasn't used for retention reporting, pay distribution or for decisions on who the company wanted to focus on developing.

Now, ever since AMD switched to a new system from SuccessFactors in 2009, ratings assessments from managers have gone from a 50-percent completion rate to a 97-percent completion rates, he says. Currently, the company uses SuccessFactors for performance management, succession planning, goal management, and career and development planning.

"It's turned the light on for us," says Miller. "In the past, we didn't know whether the people we lost were top performers. Now that we have top talent identified, we track them. We know if we're losing the people we really want to keep."

The new system helps HR determine when and where people are being lost -- if they're losing a high percentage of new employees at a certain location, for example, HR can examine the onboarding process there to see whether realistic expectations are being set or if new hires are being given a clear picture of the job and the culture, says Miller.

"We can focus on one geographic area, rather than the entire company," he says.

Like Ciena, Miller and his team are using their system to create interactive nine-box matrices to help identify and develop top talent -- an approach that greatly appeals to AMD's top brass, he says. 

"The pleasant surprise is that using the nine-box in this fashion has given us a great deal of credibility with the C-suite," says Miller. "They can relate to the nine-box -- when we flash the numbers up there as to whether we differentiate on pay and performance, it's a nice, consistent model, so even if they're not familiar with it at first, they quickly get familiar with it."

A key piece of advice for other HR practitioners? Keep it simple, says Miller.

"You can easily overcomplicate things by turning all the features on at once -- we did that midyear, and now we're easing up on it," he says. "HR tends to get enamored with its technology and processes and that actually takes away from the value of what's being delivered." 

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