CASE STUDY. Talent Assessment and Planning at American Express IN THIS CASE STUDY FOCUS: BERSIN & ASSOCIATES

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1 CASE STUDY BERSIN & ASSOCIATES Talent Assessment and Planning at American Express Leighanne Levensaler, Director of Talent Management Research November 2008 IN THIS CASE STUDY FOCUS: PLANNING & STRATEGY CONTENT DEVELOPMENT LEARNING PROGRAMS With one of the world s most recognizable brand names, American Express has grown from its origins as a freight handler to a global financial services company best known for its charge cards. To protect and continue its industry-leading position, American Express has created a world-class global talent assessment for its top 5,000 leaders across all divisions and locations. Today s strategy is the result of its ongoing evolution over the past decade. In this case study, we will examine the key components of the company s approach, how it has developed to meet its changing needs and how the effort is effectively managed. e LEARNING TECHNOLOGY ANALYTICS & MEASUREMENT TALENT MANAGEMENT LEADERSHIP DEVELOPMENT

2 TABLE OF CONTENTS Company Background 3 Business Environment 4 Company Culture 4 Talent Management at American Express 7 Talent Assessment 8 The Talent Profile 10 Leader Assessment 11 The Nine-Box Tool 12 One Key Question 13 Talent Planning and Assessment Governance 15 Supporting the Talent Assessment 16 Enabling Technology Solution 16 Lessons Learned and Best Practices 17 Business Results / Business Impact 19 On the Horizon 19 Conclusion 19 Appendix I: Table of Figures 21 About Us 22 About This Research 22

3 Company Background Established in New York in 1850 as an express delivery service for goods and valuables, American Express Company (NYSE: AXP) was founded in tandem with the country s desire to expand and move westward. Capitalizing on the slow-moving U.S. Postal Service (which was expensive and nonexistent in many areas, and could not handle anything larger than a letter-sized envelope), the company stepped in to fulfill an emerging consumer need. That pioneering spirit of innovation has aided the company to grow to a worldwide operation with 65,800 employees and businesses in 130 countries across the globe. Fifty years ago in 1958, American Express continued to grow and innovate by introducing the first American Express Card which, by the year s end, had 500,000 customers (including Elvis Presley and former President Dwight Eisenhower) and was accepted at more than 30,000 locations. From its wild-west birth, American Express is now a mature organization with an iconic brand. It is one of 30 stocks that make up the Dow Jones Industrial Average and is ranked as the 74th largest company by FORTUNE. It has also been ranked as one of the world s most valuable brands, coming in at number 14 in a survey by BusinessWeek and Interbrand, and having a value estimated at $27.1 billion. The current CEO took over in Figure 1: American Express at a Glance Company Name: American Express Company Type: Public (NYSE: AXP) Industry: consumer financial services Founded: 1850 Employees: 65,800 Headquarters: NY, NY Locations: 130 countries worldwide 2007 Revenue: $27.1 billion 2007 Net Income: $4 billion Website: Source: Bersin & Associates, 2008.

4 Business Environment American Express has carved out a leadership position in the competitive financial services industry by creating a range of services and products from charge and credit cards to the world s largest travel agency. Despite the breadth and depth of its operations, the company boasts an enviable turnover rate of less than one percent. In late 2007, the company began to feel the effects of the weakened U.S. economy. Card-member spending slowed as the housing crisis mounted, and past-due loan and write-off rates rose. In response to those factors, American Express increased its lending reserves in the fourth quarter of 2007 and has taken on a more cautious outlook for While 2007 and 2008 have brought difficult economic times for all sectors of American business, American Express is weathering the storm with strength and even has plans to expand its market leadership as other companies in its sectors face internal challenges. Company Culture American Express s goal is to be one of the most respected companies in the world by achieving results through commitment to integrity and service. The company is committed to creating a work environment that not only enhances employee satisfaction, but inspires and enables employees to reach higher. American Express prides itself on maintaining a culture that is lead by a set of core guiding principles. It strives to incorporate these principles into its brand, products, services and, of course, its workforce. These guidelines include the following. Customer Commitment Developing relationships that make a positive difference in its customers lives. Quality Providing outstanding products and unsurpassed service that, together, deliver premium value to customers. Integrity Upholding the highest standards of integrity in all of its actions.

5 Teamwork Working together, across boundaries, to meet the needs of customers and to help the company win. Respect for People Valuing its people, encouraging development and rewarding performance. Good Citizenship Being good citizens in the communities in which its employees live and work. A Will to Win Exhibiting a strong will to win in the marketplace and in every aspect of its business. Personal Accountability Making employees personally accountable for delivering on company commitments. Workplace Recognition 2008 Asia Top 25 Places to Work in India (#9) The Economic Times and Great Place to Work Institute Europe 50 Best Work Places in Spain (#2) Great Place to Work Institute, April Best Practices & Best Companies to Work for in Italy (#5) I ESPRESSO and Great Place to Work Institute, March 20 Best Big Companies to Work For (#7) The Sunday Times (U.K.), March Special Award for Well-Being The Sunday Times (U.K.), March Three Stars (Extraordinary Employer) Best Companies (U.K.)

6 100 Best Companies to Work for in Germany Great Place to Work Institute, February Latin America Top 100 Companies with the Best Image in Argentina (#6) Apertura / SEL Consultants, March 100 Best Places to Work in Mexico (#10, up from #14 last year) The Great Place to Work Institute Mexico and Grupo Mundo Ejecutivo United States and Canada 40 Best Companies for Diversity Black Enterprise, July Latina Style 50 Latina Style, March / April Top 50 Companies for Diversity (#10) Diversity Inc., April Top 30 Companies for Executive Women National Association of Female Executives, March Top 50 Companies for Fertility & Adoption Benefits Conceive Magazine, February 100 Best Companies to Work for in America (#62, up from #74 last year) FORTUNE, January Best Places to Work for GBLT Equality Human Rights Campaign, January Corporate Recognition 2008 America s Most Admired Companies (#13, up from #17 last year) FORTUNE, March Executive Honors 2008 World s Best CEOs Barron s, March e

7 Talent Management at American Express Over the past decade, American Express has put a great deal of time and resources into creating a multifaceted definition of talent management. On one level, the company s focus on talent management is defined as taking a strategic and deliberate approach to supporting employees throughout their tenures at the organization. This includes how the labor force is sourced, attracted, selected, brought onboard, developed, engaged, assessed and rewarded. On another level, it also includes strategic planning as to how individual employees and talent pools are moved within the company, and how American Express can effectively drive performance. Creating a strategy around this definition of talent management involves taking an integrated approach. As Figure 2 shows, talent management links the elements of recruitment, leadership learning and development (L&D), engagement and retention, performance management, benefits and compensation, and talent assessment and succession planning. Each element is a key factor to ensuring that the flow of talent is proactively and strategically managed through the organization. Figure 2: Talent Management at American Express Figure 2: Talent Management at American Express Source: American Express,

8 Within that framework, the talent assessment and succession planning process is directly linked to the other key elements. For example, American Express uses the information it gains about an employee s capabilities and goals to help match him / her with internal recruitment opportunities thereby helping to provide the company with the right talent at the right time in the right role as his / her career progresses. The company is also able to use employee profiles to help create targeted and accurate recruitment profiles for specific jobs. Another example is the linkage to the performance management process (PMP). Information captured in the PMP (such as strengths, development needs and performance ratings) are incorporated into the talent assessment process. This provides the organization and managers with a holistic view of each individual. Talent assessment, in turn, includes the career experiences an employee may need which is incorporated into the development planning process. The last example of how talent assessment is linked to the other key talent management components can be seen in its relationship to leadership L&D. Talent assessments include career conversations between employees and leaders. This open discussion helps pinpoint appropriate development areas for employees, and aids them in finding and utilizing development opportunities within the company. A N A LY S I S In today s competitive and global corporate landscape, proactively managing talent is key to American Express success. Talent Assessment American Express has a centralized and globalized talent assessment set of processes for executives at the director level and above across all lines of business. Talent assessment is focused on planning, assessing, developing and measuring talent annually. Leaders review various aspects of their reports including: Succession plans; Major strengths and development needs; and, An employee s contribution level and career potential. This approach helps leaders continuously assess and align talent capabilities to the business priorities. It provides an avenue for leaders to identify talent in a heavily matrixed organization. The goals of talent

9 assessment include finding the right talent capabilities to meet the right business priorities at the right time for the company s evolving needs. Achieving these goals are key facets of American Express s approach. Talent assessment was initially conceived as a succession management tool, but has evolved far beyond that narrow scope. The company began by focusing on the top approximately 150 executives and was shortly thereafter expanded to include the top 550 senior-level employees. By 2003, it was expanded to include entry-level vice presidents, adding another 1,000 employees and covering the top two percent of the organization. As of 2006, talent assessment now includes the top 5,000 leaders, centrally managed to ensure global consistency and a deeper understanding of the pipeline talent for the future leadership of the organization. The talent assessment process unfolds throughout the calendar year, as Figure 3 shows. Between February and April, the vice president and above assessments typically take place. The process is staggered to allow the company and its leaders the time and resources necessary to manage the process. The CEO plays a critical role in these assessments, making a significant time investment to have a dialogue with each line-ofbusiness president. This culminates in a senior leadership review of the top few leaders of the organization to examine overall talent initiatives for the company, discuss emerging capabilities needs and review K E Y P O I N T American Express supports talent assessment to enable its employees to reach their highest potential through proactive career development planning and to continuously assess the alignment of talent capabilities with business priorities. Figure Figure 3: High-Level 3: High-Level Process Process Overview Overview and and Timelines Timelines Source: American Express, 2008.

10 individual senior talent. The vice president and above assessments are also revisited in the fall, from September to November. During this period, employees who are new to their roles or to the organization are included and senior leadership meets once again in November to proactively examine progress made during the year and discuss talent planning objectives for the upcoming year. (There are some variations in the process to allow for the unique needs of a business unit or geography.) The Talent Profile The talent profile is the employee s contribution to the talent assessment process. When American Express instituted the employee talent profile, it was a sophisticated and cutting-edge concept. The company has continued to refine this tool, and today it is proactively used for recruitment, as well as talent evaluation and identification. The talent profile creates alignment that has benefits for both the organization and the employee. Leaders across the organization know the talent capabilities and aspirations of the employees. Employees have the opportunity to identify their previous career experiences and identify preferences for future roles. Participating talent is invited in the early part of the year to fill out an online profile that is similar to an extended résumé. The talent profile is available for updating all year long as an employee obtains new roles and experiences. As Figure 4 explains, the talent profile has two main parts past career experiences, and future aspirations and preferences. This two-tiered query allows employees to make certain their experiences and talent are accurately understood by the company, while also voicing their desires for future geographic locations, lines of business and other career goals. Participation is voluntary. 10

11 Figure Figure 4: Employee 4: Employee Contribution Contribution The The Talent Talent Profile Profile Across the organization, the use of the profile serves three main purposes for the organization and the individual, as follows. 1. Identification for Roles and Movement Allows leaders to identify employees as successors to a role or as a candidate for a new opportunity. Acts as a reference to best align career preferences with upcoming opportunities. 2. Talent Assessment Allows the leadership team and HR to align employee preferences with their assessments during talent assessment. Ensures alignment between employees and leaders during career conversations. 3. Ongoing Development Used during development planning to ensure that employees plans are aligned with their career aspirations. Identifies individuals for inclusion in upcoming development experiences. Leader Assessment Source: American Express, The leader assessment involves helping the company s leaders create a talent assessment summary that details employees contributions 11

12 and potential. As part of this process, leaders review their current business strategy, as well as any key talent needs for the coming year. A leader will consider several data points to provide a complete picture of an employee s contribution and potential, as well as future growth opportunities. Information for the talent assessment summary is captured from the nine-box tool and one key question. The Nine-Box Tool The nine-box tool enables a consistent framework to align talent across American Express. An employee s contribution and potential are assessed. Each box on the tool has a very specific definition, including messages about development actions. Given its importance and complexity, training and performance support on the use of the ninebox tool is offered to leaders. Figure Figure 5: The 5: The Nine-Box Nine-Box Tool Tool Source: American Express,

13 One Key Question One key question is formulated by the leader during talent assessment, and is continuously revisited throughout alignment meetings and individual career discussions. It is meant to provide the employee with tangible feedback regarding developmental needs both for his / her current position and future aspirations. The question is also meant to help the company understand and identify the employee s current and future potential. The individual questions are created by the leaders, but American Express offers training in developing these questions which seek to discover the one detail the company needs to know about the employee and the one piece of information the employee needs to impart. Figure Figure 6: One 6: One Key Key Question Question Source: American Express, The leader review allows leaders to take a close look at succession plans, the major strengths and development needs of top talent, and their personal perception of an employee s current performance and future potential. During this process, leaders are encouraged to look 13

14 at their current line-of-business strategies, as well as examine the key leadership roles and identify the capabilities needed to successfully function in those roles. They are also asked to anticipate talent needs for the coming year. Once completed, these assessments may then be approved or reviewed by more senior team leaders. Depending on the business unit, these assessments may then become part of a broader discussion of talent, both in terms of individuals and the team; teams may discuss current business strategy and future talent needs. Next, a senior leadership talent review meeting takes place to discuss broader talent concerns and needs, such as succession planning. Once assessments have been approved, leaders hold meetings with their employees to discuss the assessments. During these career conversations, a transparent dialogue is stressed, as well as pinpointing career growth and development opportunities. Through the balanced contributions of both leader assessment and employee profiles, American Express has created a transparent process that fosters a culture of openness. Figure Figure 7: A 7: Holistic A Holistic Talent Talent Management Management Approach Approach Source: American Express,

15 Talent Planning and Assessment Governance Executive sponsorship at American Express is very strong. The CEO meets with senior direct reports once a year for an entire day to discuss the executive talent landscape. This meeting includes the top four to five individuals in the organization, alongside senior HR leadership. They discuss what is important for the entire organization and they walk away owning critical action plans. Following this leadership talent planning meeting, the board of directors reviews senior leadership succession and talent planning in a half-day annual meeting. Additionally, each line of business executive is held accountable for key talent planning priorities through the employee goal rating for their business. Specifically, actions and metric results for ongoing executive succession, building senior leadership pipelines, high-potential 1 retention, development planning and executive diversity are critical priorities that impact the business year-end rating. At American Express, leaders across lines of business are accountable for talent assessment and planning, but HR plays a very important role. The executive talent management group is responsible for setting the strategy, defining processes, and ensuring proper execution and measurement. This is done through a conduit of HR relationship leaders from across the company s 22 businesses. The relationship leaders help to translate the talent planning and assessment to their individual business units and geographies. Operational, cultural and legal considerations are made without sacrificing talent assessment s goals. To help achieve consistent results globally, the HR department stresses freedom with a framework. To make changes to the strategy or practices, the global talent assessment group engages the relationship leaders, as well as receiving the design input from business leaders. Depending on the changes in question, the global talent assessment group works with the voice 1 A high-potential employee is an employee who has been identified as having the potential, ability and aspiration for successive leadership positions within the company. Often, these employees are provided with focused development as part of a succession plan and are referred to as HiPos. 15

16 of the customer champions in the lines of business. The champions provide tremendous value by offering input and testing proof of concepts for new practices. Supporting the Talent Assessment The line-of-business relationship leader is charged with ensuring that the business units / leaders are driving the right talent outcomes, rather than just talent discussions and ensuring that the critical priorities are being focused on for his / her specific business unit. To help with the process across all lines of business, American Express has developed a core of tools and tutorials (including leadership development capability coaching sessions and training curriculum), targeted to having successful career discussions. These programs are lead by the line-ofbusiness owners. The company also offers a program called, Leading and Inspiring Employee Engagement, in which every executive from the vice president-level and above participates. This program focuses on how to link talent planning with talent strategy and is cofacilitated by HR. Global talent assessment lead also partners closely with the executive development for ongoing programs related to the development of the vice president-level and above, as well as the critical up and coming pipeline. Enabling Technology Solution The technology used to enable these world class practices is known internally as ERS-OMI (Executive Resource System Online Talent Assessment System). This solution, provided by Organization Metrics, has more than a 10-year history at American Express. Since the talent planning and assessment started off with the modest goal of top succession planning, the initial technology implementation was also modest. The system was initially designed to be used one day a year to support talent assessment and planning for the top 100 leaders. It enabled the display of talent information in a graphical format for the board to use during talent reviews. 16

17 As the approach evolved, so did the technology solution, which now supports talent assessments that include both an online talent profile and the leader talent assessment summary report. The profile (which is similar to a résumé) includes competencies, memberships, geographic preferences, career experiences and future expectations. This information is important because it allows leaders to have deeper discussions about career aspirations during the assessment and to help employees gain the development experiences to meet their aspirations. It also allows the company to include the employee in relevant job searches, and identify talent and talent pools for succession needs as well as potentially helping the company to identify needed skills within its existing talent pool and create profiles for recruitment. Another key item the solution provides is the ability for a leader and his / her HR business partner to monitor the process. In addition to the profile, assessment summary and nine-box reports, the system provides a high-level overview, allowing online tracking of talent assessment and approval completions. Executive talent assessment, not the information technology group (IT), owns and manages the system with its partners from Organization Metrics (although IT is involved). The solution provider supplies integration support for the ERS-OMI system. Currently, the system relies on a feed of basic employee data from American Express s PeopleSoft ERP system. The ERS-OMI system does not integrate with the recruitment management or performance management systems today. There are more than 5,000 employees using the system to complete their profiles and conduct assessments, and 150 line-ofbusiness resource leaders supporting the employees. Lessons Learned and Best Practices One of the key lessons American Express has learned over time is that HR must have a successful partnership with line-of-business leaders and encourage accountability across those lines. The approach cannot be perceived as simply HR pushing a concept. There must be buy-in and integration at the executive talent level, with talent assessment seen as a key part of recruiting, learning, diversity, compensation and 17

18 implementation of business strategies. By creating an integrated group for talent assessment, American Express has been able to support its global solutions. However, American Express is a large organization that is heavily matrixed and continuing to move forward is a constant challenge. There are many cultural nuances across geographic areas and lines of business that HR must understand as well as respond to the ongoing evolution of the talent strategy as it becomes necessary. This includes understanding business needs across the globe, successfully predicting future talent needs as far as two years into the future, and continuing to evolve the strategy to be more predicative and proactive in understanding the company s diverse needs. While a talent assessment may reflect a point-in-time perspective of the organization, the strategy must strive to be ahead of the ongoing business talent planning needs in order to be most effective. Collecting the necessary data for talent assessments is a relatively straightforward process. The challenge comes in ensuring that the right level of discussion is happening in assessments and planning, despite geographic and cultural nuances. American Express places a great deal of focus on outcomes and action planning, rather than just discussing the overall characteristics of individual talent. The value of the assessments lies in transparent career discussions, which require different skills across the company s businesses. It is also necessary to have an understanding of the units business strategies that is far enough ahead of current needs to create useful talent planning. Talent assessment aims to have the necessary workforce ready before it rolls out into a new business space. Another key lesson is the importance of transparency, and helping employees have a clear understanding of how and why they are being evaluated. The process was carefully designed to foster a culture of openness that helps employees stay engaged and trusting of the process as well as to help employees feel that participation will help them reach their highest potential within the company. 18

19 Business Results / Business Impact The results of the talent planning and assessment have been numerous and diverse. Currently, American Express is able to include precise metrics in relation to its talent. Each business unit has both a talent management and a diversity scorecard, and is held accountable on an annual basis. This scorecard considers executive succession, building senior leadership pipelines, high-potential retention, development planning and executive diversity. This scorecard balances hard metric results over time, as well as the specific actions that are taken to build the right long-term strategy. For example, the key metrics for executive succession evaluates the portion of high-potential talent in the senior vice president and above succession pool and the number of placed successors. This scorecard section also considers the targeted actions taken to ensure long-term bench strength. Evaluating factors include actions to develop, retain, hire and move critical pipeline talent. On the Horizon American Express next plans to take the approach down one more level within the company. Today, it only covers seven percent of the company s workforce. If it is expanded down one level to encompass the manager level, the majority of the businesses leaders will be covered amounting to an additional 11,000-plus employees in the talent assessment pool. However, the company will focus only on the core elements that are appropriate for this more junior level. Conclusion American Express has created a nuanced and comprehensive talent assessment approach that successfully functions on a global level across all lines of business. The approach incorporates both an employee profile and a leader assessment and culminates with an open 19

20 dialogue between talent and leadership that helps employees reach new developmental and career goals while, at the same time, aiding American Express in putting the right talent in the right place at the right time. To allow for variations in culture (both geographically and across lines of business), talent assessment allows for flexibility within a framework. While HR remains the ultimate driver of the program, line-of-business leaders are empowered and held accountable within their own units. This allows HR to build consensus and enthusiasm, and continue to proactively evolve the talent strategies, which have been key factors in its continued development. 20

21 Appendix I: Table of Figures Figure 1: American Express at a Glance 3 Figure 2: Talent Management at American Express 7 Figure 3: High-Level Process Overview and Timelines 9 Figure 4: Employee Contribution The Talent Profile 11 Figure 5: The Nine-Box Tool 12 Figure 6: One Key Question 13 Figure 7: A Holistic Talent Management Approach 14 21

22 About Us Bersin & Associates is the only research and advisory consulting firm focused solely on WhatWorks research in enterprise learning and talent management. With more than 25 years of experience in enterprise learning, technology and HR business processes, Bersin & Associates provides actionable, research-based services to help learning and HR managers and executives improve operational effectiveness and business impact. Bersin & Associates research members gain access to a comprehensive library of best practices, case studies, benchmarks and in-depth market analyses designed to help executives and practitioners make fast, effective decisions. Member benefits include: in-depth advisory services, access to proprietary webcasts and industry user groups, strategic workshops, and strategic consulting to improve operational effectiveness and business alignment. More than 3,500 organizations in a wide range of industries benefit from Bersin & Associates research and services. Bersin & Associates can be reached at or at (510) About This Research Copyright 2008 Bersin & Associates. All rights reserved. WhatWorks and related names such as Rapid e-learning: WhatWorks and The High Impact Learning Organization are registered trademarks of Bersin & Associates. No materials from this study can be duplicated, copied, republished, or re-used without written permission from Bersin & Associates. The information and forecasts contained in this report reflect the research and studied opinions of Bersin & Associates analysts. 22