Talent Management Function and Compensation Complimentary Copy Prepared and provided to you compliments of the HRG Search Team:

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1 Talent Management Function and Compensation Complimentary Copy Prepared and provided to you compliments of the HRG Search Team: Mike Coman/CEO, Brenda Snyder/President, Donna Franz/ Search Consultant, and Sue Oberliesen/ Search Project Manager

2 Introduction HRG Search is a retained search firm with a specialty in the Talent Management and Human Resources discipline. As a courtesy to our existing and potential clients, we have created this report to assist business leaders in understanding and staffing the Talent Management function. This report includes information on the Talent Management structure, roles, compensation, experience, and education levels of incumbents across multiple industries and companies. Project Approach This report incorporates data from three sources: 1. Interviews with Talent Management leaders across industries 2. Data from HRG Search s proprietary database of individuals holding Talent Management roles 3. Information gathered by HRG Search as a result of staffing Talent Management positions Appendix A provides a list of companies either participating in the interviews or included in the data analysis. Executive Summary The Talent Management function across industries and companies of varying size is similar in scope, responsibility, and functions. The reporting structure varies depending on the organization s specific hierarchy. The Talent Management function: Reports through the OD/OE or the Learning & Development function, which reports to the most senior Human Resources leader, or; Is led by a Vice President who reports to the most senior Human Resources leader. In most cases where this occurs, the Talent Management function incorporates the OD/OE and learning functions. The average base compensation for the Vice President level is $198,000 and the average bonus is 37%. The average overall work experience for Talent Management professionals at the Vice President level is 22 years. Most incumbents hold a Master s degree and a Master s degree is required when staffing at this level. The average base compensation for the Director level is $158,000 and the average bonus is 24%. The average overall work experience for Talent Management professionals at the Director level is 20 years. Most incumbents hold a Master s degree and a Master s degree is required when staffing at this level. The average base compensation for the manager level is $124,000 and the average bonus is 18%. The average overall work experience for Talent Management professionals at the manager level is 18 years. Most incumbents hold a Master s degree, but a bachelor s degree was required when staffing at this level. The average base compensation for the consultant level is $108,000 and the average bonus is 12%. The average overall work experience for Talent Management professionals at the consultant level is 15 years. Degrees at this level were varied and ranged from Bachelor s to 2

3 Master s to PhD degrees; individuals with this title tended to operate as specialists with deep expertise in a specific area of Talent Management. Degree requirements varied depending on the type of consultant position internal or external consulting. Organizational Structure and Maturity The organizational structure and roles for Talent Management at the corporate and business unit level was driven by several factors: The value placed on human capital strategies of which Talent Management is a subset The maturity level of the Talent Management strategy and processes. Maturity is defined as length of time an organization has focused on Talent Management and how embedded the Talent Management processes are in the organization The sophistication of the Human Resource Generalists in leading and implementing Talent Management efforts Functions and Roles Most companies have a Center of Excellence model with staff at the corporate level responsible for developing strategy, process, and programs that are deployed through the Human Resource business partners in the business units. Some organizations have Talent Management staff reporting to the business partners in the field; in other cases, the Human Resource business partner handles the Talent Management work. The corporate Talent Management function is typically responsible for the most senior positions in the organizations. This responsibility includes talent assessment, facilitating talent reviews, and coaching and development. Most companies had standardized processes that rolled up to the Board level for talent reviews and this was the responsibility of the corporate Talent Management function leader. Generally, the Talent Management function includes: Organizational, role competency, and leadership models Talent reviews (succession planning) Coaching and development Performance management Employee engagement and retention systems and processes at the organization level Assessments and testing (360, selection, etc.) individual level assessments Diversity strategy, programs, data, not compliance Metrics and analytics qualitative and quantitative business metrics, not HRIS type data Titles and Levels Generally there are two organizational models for the Talent Management function: 1. The Talent Management function is staffed with a Vice President, reports to the most senior Human Resources leader, and is responsible for Talent Management, OE/OD and Learning. In this case, a Director level existed and these individuals had responsibility for specific processes within the Talent Management function. 3

4 2. Talent Management falls within the OD/OE and Learning function which is staffed by a Vice President reporting to the most senior Human Resources leader. Reporting to the Vice President was a Director with responsibility for Talent Management. Peers to this position were Directors with responsibility for Learning or OD. If a manager or consultant level exists in the organization, these positions are focused on specific programs or processes, e.g., performance management, employee engagement, and reports up through the Talent Management leader. Companies just beginning the Talent Management journey at the corporate level have managers with program or process responsibility reporting to the Talent Management leader at the corporate level. These companies also have positions at the corporate level dedicated to analytics for the Talent Management processes and programs. This is also the case for companies with sophisticated and mature programs and processes in place. Companies somewhere between the start-up and mature phase did not have this additional level at the corporate function. It was either not resourced (there were no enterprise wide processes or metrics) or, in the case of mature organizations, it was embedded in the HR business partner function. In all cases, the corporate role was responsible for compiling and reporting organization-wide information. Compensation Title Average Range Median Base Bonus Base Bonus Base Bonus Vice President $198k 37% $ k 18-60% $198k 40% Director $158k 24% $ k 0-50% $155k 25% Manager $124k 18% $ % $120k 20% Consultant $108k 12% $80-140k 0-20% $105k 13% As a point of information, data analysis was performed in 2006 and 2010 using similar comparable data from HRG Search s database. The average base salary for Directors in 2006 was $142,000 and $155,000 in Data was not compiled and analyzed for the other levels in However, the 2010 salary for managers was $119,000 and for consultants it was $107,000. These numbers reflect little change in the market place over the last two years. Years of Service, Competencies and Experience INCUMBENTS Title Average Range Median Vice President Director Manager Consultant

5 Incumbents in the roles had more experience than the interview participants required when staffing Talent Management positions at all levels. The type of experience ranged from individuals who were OD/OE professionals for the majority of their career to Human Resources Generalists who had moved into an OD/OE function. Most interview participants indicated that they would prefer an OD/OE Specialist with Human Resources Generalist experience in their career. There was a strong bias for Talent Management professionals with field or line Human Resources experience, either as a generalist or in a specialist assignment. Competencies for Talent Management professionals included: Relationship building and collaboration Consulting Program and project management Political savvy and maturity in working with senior leaders and executives Strategy and process, design, development, planning, and management Facilitation Data synthesis and analysis Learner and teacher Education Approximately 70% of the incumbents held Master s degrees and 70% of the respondents required Master s degrees for the Vice President and Director level roles. The majority of the incumbents at the manager level held a Master s degree, however when staffed, the manager level requirement was a Bachelor s degree. A few held PhD degrees; this was rarely a requirement for staffing positions, and in some cases it was preferred. Those with two degrees held at least one degree in the Behavioral Science or Human Resources arena: Industrial and Organizational Psychology, Organizational Behavior or Development, and/or Human Resource Management. Metrics During the interviews, questions were asked about metrics used to measure the overall effectiveness of the Talent Management strategy, system, and process. Most respondents indicated they had something in place, but it was not at the level of sophistication they desired and this was a work-in-process. Here is a sampling of the metrics: Talent Reviews and Movement Internal promotions vs. external hires Internal fill rate, talent movement, placement from ready now candidate pool Preparedness to lead and make money (tough to measure, but attempting) Ready now candidates, without duplication for critical positions Candidates in the pipeline Quality and depth of succession plan Talent Management ratings match compensation outcomes Number of key roles with no bench strength identified Percent of population with completed development plans Performance Management 5

6 Performance review completed on time Distribution of performance ratings Retention Decline in voluntary attrition Regrettable turnover (loss of pipeline individuals) Turnover of top talent Retention of highest rated performers Diversity Diversity goals global participation in talent programs, US demographics Other Human capital plan actions implemented Executive headcount as a measurement of scaling the business appropriately and having the right people in place We trust that you have found this information helpful to you and your organization. We welcome comments and feedback. Please direct them to Brenda Snyder, or brenda.snyder@hrgsearch.com. The Human Resource Group (HRG) is a retained search firm focused on finding transformational leaders across all disciplines and industries for their clients. In addition to search services, HRG offers OE and OD consulting services under the leadership of Brenda Snyder, SVP Search & OE Consulting. For more information about HRG Search, please visit our website at hrgsearch.com. 6

7 COMPANIES # of Revenue - Fortune 500 Company Industry Employees billions Ranking 3M Industrial Conglomerates 84,000 $30 97 Allstate Insurance - Property and Casualty 38,000 $33 89 American Express Financial Conglomerates 63,000 $32 91 Amgen Biotechnology 18,000 $ Anheuser Busch Beverages: Alcoholic 116,000 $ Anonymous Aerospace/Defense 172,000 $69 36 ATK Aerospace & Defense 15,000 $5 472 Bank of America Major Banks 282,000 $115 9 Baxter Medical Specialties 49,000 $ Bombardier Aerospace Aerospace 66,000 $18 Canadian company Cardinal Health Medical Distributors 32,000 $99 19 Cargill Food/ Farm Production 138,000 $119 Private company Carlson Hospitality 40,000 $38 Private company Colgate Palmolive Household/ Personal Care Products 39,000 $ ConAgra Food: Major Diversified 23,000 $ Constellation Energy Energy/Electric Utility 8,000 $ Convergys Customer Management 75,000 $589 MIL not ranked Cummins Trucks/Construction/ Farm Machinery 44,000 $ Computer Processing Dell Hardware 103,000 $61 41 DexOne Marketing Solutions 2,700 $1 not ranked Dr Pepper Snapple Group Beverages: Non-Alcoholic 19,000 $6 404 Eaton Electrical Products 73,000 $ Edward Jones Financial Services 17,000 $4 not ranked First Solar Semiconductor - Specialized 7,000 $3 not ranked Hewlett Packard Computer Processing Hardware 350,000 $ Home Depot Home Improvement Chains 321,000 $68 30 Honeywell Industrial Conglomerates 132,000 $33 81 Hospira Drug Delivery 15,000 $4 not ranked Humana Managed Health Care 40,000 $

8 IBM Information Technology Services 433,000 $ Intel Semiconductors 100,000 $44 56 JC Penney Department Stores 156,000 $ JDS Uniphase Electronics 4,700 $2 not ranked Johnson & Johnson Pharmaceuticals: Major 118,000 $62 40 Kiewit Engineering, Construction 15,000 $ Lear Auto Parts: OEM 98,000 $ Lockheed Martin Aerospace & Defense 123,000 $47 52 Lowes Home Improvement Chains 234,000 $49 50 Lumeris Information Technology and Services 750 $.5 not ranked Magellan Medical Distributors 4,800 $3 not ranked Manpower Personnel Services 31,000 $ Mars, Inc. Food Processing 65,000 $30 Private company McAfee Technology 7,000 $2 not ranked McKesson Medical Distributors 36,000 $ Motorola Telecommunications Equipment 23,000 $ Novartis Drug Manufacturers - Major 124,000 $59 Swiss company; 164 Global Fortune 500 PepsiCo Beverages: Non-Alcoholic 297,000 $58 43 Pfizer Pharmaceuticals: Major 104,000 $68 31 Pitney Bowes Office Equipment/Supplies 29,000 $5 421 Qualcomm Telecommunications Equipment 21,000 $ Staples Specialty Stores 89,000 $ Starbucks Restaurants 149,000 $ Starcom MediaVest Group Business Services/ Advertising and Marketing 6,200 $600 MIL not ranked Takeda Pharmaceutical Company, Ltd. Pharmaceuticals: Major 18,000 $17 Japanese company Thomson Reuters Information & Delivery Services 60,000 $13 not ranked Walgreens Drugstore Chains 247,000 $67 32 Wal-Mart Discount Stores 2,000,000 $422 1 Whirlpool Electronics/Appliances 68,000 $ Interviews were conducted with key leaders at the companies listed in bold. 8