"Talent," a term that´s historically been used mostly as a synonym for a company´s entire workforce, is now being defined more precisely and narrowly, according to a new Towers Perrin survey of senior HR executives in North America. The survey shows that more and more companies recognize the importance of retaining talent in a demographically challenged environment, and are increasingly focused on a core group of leaders, technical experts and key contributors who can drive their business forward. The survey also shows that, while HR executives view talent retention and development as one of their most critical objectives, few believe their HR departments have the skills needed to manage this emerging talent pool.
Defining Talent
Groups considered to be "talent" include senior leadership (according to 86% of respondents), employees at mid-level with leadership potential (82%), key contributors or technical experts (76%) and entry-level employees with leadership potential (48%). These defined talent pools make up, on average, no more than 15% of the total workforce.
"As businesses transform to drive top-line growth, we´re seeing talent emerge as a top strategic priority for CEOs and boards, as well as HR executives," said Max Caldwell, a Towers Perrin principal and one of the leaders of the firm´s HR Services business Workforce Effectiveness practice. "Creating a robust ´talent supply chain´ that delivers the required number of leaders and key contributors who possess the right mind-set and skills has never been more important. However, the HR function in many organizations is not yet delivering sufficient value in this critical area."
To understand the current state of the art in talent management, Towers Perrin surveyed more than 250 organizations across the United States and Canada. All survey respondents have decision-making responsibility for talent or the workforce overall, or are involved in the day-to-day operation of talent management programs in large or midsize companies across a variety of industries.
The Towers Perrin survey clearly shows that organizations are distinguishing between talent management as a set of practices and programs for a relatively small, if critical, segment, and workforce management as a set of practices and programs covering the entire workforce. But no more than half of respondent companies believe that HR has the skills across a wide range of managerial support activities needed to effectively deliver on the talent management role. Over two-thirds of respondents say their HR department does not have the skills necessary to measure employee engagement on an ongoing basis or to evaluate the return on workforce-related investments. The inability to capture and disseminate relevant data to managers is problematic since companies have no quantitative foundation from which to develop a talent management strategy and build and deploy meaningful processes.
An Emerging Dedicated Talent Management Role
Currently, close to three-quarters of the respondent companies (73%) do not have a formal position in place to manage talent. But 16% have instituted such a position and another 11% intend to do so within the next year.
"Many of the larger and more forward-thinking organizations are creating a special senior talent management position to focus specifically on the organization´s talent strategy," noted Caldwell. "The titles may differ, but these roles seek to integrate things like strategic workforce planning, recruitment, leadership development and career management, which had previously operated in silos." These companies may well be a step ahead of the others since Towers Perrin´s data show that those organizations that establish a formal talent management position are also far more likely to follow through with more structured processes and deploy current best practices to the greatest effect.
The survey confirms that managing talent is very much an emerging discipline - and one that requires a substantial amount of focus and time to institutionalize. Even today, while companies use a wide array of talent management processes, most are informal and ad hoc. In fact, the only formal approach used by a majority of respondent companies is performance management.
"The Towers Perrin survey uncovered that, while there is a wide range of talent management processes and practices out there, there is a lot of room for HR to raise its game," concluded Caldwell. "One opportunity is better integrating talent strategies to enhance impact. Another is empowering a senior talent management executive to ensure better execution and establish clear accountability. And a third opportunity is more actively engaging senior line leaders as full partners in the company´s talent agenda. Our research, and our experience working with leading global companies, indicate that these are the keys to achieving breakthrough talent and business results."
About Towers Perrin
Towers Perrin is a global professional services firm that helps companies improve their performance through effective people, risk and financial management. Through its HR Services business, Towers Perrin provides global human resource consulting that helps companies effectively manage their investment in people. Areas of focus include employee benefits, compensation, communication, change management, employee research and the delivery of HR services. The firm´s other businesses are Reinsurance, which provides reinsurance intermediary services, and Tillinghast, which provides management and actuarial consulting to the financial services industry. Together, these businesses have offices and business partner locations in the U.S., Canada, Europe, Asia, Australia, New Zealand, Latin America and South Africa. More information about Towers Perrin HR Services is available at www.towersperrin.com/hrservices.
