NewTalent Management Network. 2ND ANNUAL TALENT MANAGEMENT SURVEY. Conducted with support from:

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1 NewTalent Management Network 2ND ANNUAL TALENT MANAGEMENT SURVEY Conducted with support from:

2 TABLE OF CONTENTS 2ND ANNUAL TALENT MANAGEMENT SURVEY About the Survey/About NTMN...3 Executive Summary...4 The State of Talent Management An Open Question on Effectiveness...6 An In Demand, Premium-priced Specialty...9 Elite Clients, Narrowing Focus...11 Appendix About the Participants...14 TM Responsibilities...15 About the Authors...16 A Special Thanks To...17 All opinions expressed in this document are those of the author and do not necessarily represent those of any survey participants or of Development Dimensions International. For additional information about the New Talent Management Network, please go to or contact Marc Effron, Founder, at marc@newtmn.com New Talent Management Network, 2008 All rights reserved 2

3 ABOUT THE SURVEY About the Survey The 2nd Annual Talent Management Survey advances the New Talent Management Network s (NTMN) goal of conducting original research to benefit the world s talent management community. The survey helps to identify the structure, practices, and organization of the emerging talent management community. About the Survey Process The survey was administered in October and November 2008 and was open to any organization interested in participating. Participation was solicited by direct mail from NTMN and DDI, through Linked-IN and at the NTMN web site. All surveys were submitted anonymously to encourage the disclosure of sensitive information such as compensation. Any survey that did not include a revenue figure, was missing a significant amount of information or otherwise appeared invalid was not included in the analysis. About the New Talent Management Network The New Talent Management Network (NTMN) is the world s largest global network of talent management professionals, with more than 700 members. All NTMN activities are free to members. We have three primary goals: Improve talent management effectiveness by conducting original research that benefits the TM community Coordinate opportunities for local, free networking among TM professionals Increase the capabilities of TM professionals and the effectiveness of this profession Members receive benefits such as networking City Groups, access to our job board and early access to all NTMN research. For more information about the New Talent Management Network or this survey, go to or contact Marc Effron at marc@newtmn.com. Thank you for your support. Marc Effron Founder, New Talent Management Network 3

4 EXECUTIVE SUMMARY Finally a Firm Foothold? As we issue our 2 nd Annual NTMN Talent Management report amidst deteriorating global economic conditions, we re struck by a completely unexpected finding. Instead of the reflex corporate reaction to reduce HR and talent budgets that typically accompanies tough times, 75% of our surveyed companies plan to increase or maintain spending on talent management in Less than 10% plan any substantial budget reductions. This apparent shift in behavior suggests guarded optimism about how companies are now valuing their talent. On a cautious note, it also implies an expected ROI from talent practices that our survey says may not be realistic. Insights and Implications Three distinct insights emerge from our survey, each with a clear implication for how talent management groups should be built and managed Insights An Open Question on Effectiveness Talent management practices aren t providing the returns expected by corporate leaders or TM practitioners. An In-demand, Premium-priced Specialty Senior talent management practitioners are in high demand; compensation premiums exist for those in formal TM groups. Elite Clients, Narrowing Focus Formal talent management groups* largely serve executives and other senior leaders, focusing on succession planning and high potential development. Implications We must either manage expectations more realistically or execute our agenda more effectively. Over-promising and under delivering is not a strategy. A clear definition of TM and standards for TM practitioners can help companies as they build TM groups and recruit TM professionals. TM s focus on the highest value clients and highest leverage services suggests that practitioners need strong strategic, business acumen and process management capabilities. Talent management appears to have received the benefit of the doubt in this tough economic environment. As talent management practitioners, we must use this opportunity to prove that great talent practices truly deliver great business results. We hope that this report provides guidance that will help you to deliver on this promise. Note: In this report we refer to Formal TM groups and Other TM groups. Formal Talent Management groups are those called Talent Management within their company. Other Talent Management groups are those that perform TM work but where no formal TM group exists. 4

5 STATE OF TALENT MANAGEMENT 5

6 INSIGHT #1 An Open Question on Effectiveness Our study s first finding echoes recent reports by McKinsey, BCG and Deloitte HR and TM are not delivering acceptable results to business or HR leaders. Given the talent challenges facing the world s organizations, this lack of outcomes must be quickly addressed. We know that the behavioral science behind TM is sound, so what is preventing TM from being more effective? Do both executive and HR leaders have unreasonable expectations? Are business leaders not sufficiently supporting talent practices? Or, are TM leaders simply not getting the job done? TM Practitioners satisfaction with effectiveness in each area This finding was consistent across large and small companies, those with lower revenue and higher revenue, whether or not they had a formal TM group and across every region in the world. Note: In this report we refer to Formal TM groups and Other TM groups. Formal Talent Management groups are those called Talent Management within their company. Other Talent Management groups are those that perform TM work but where no formal TM group exists. 6

7 INSIGHT #1 (cont.) Line Executives Likely Not Satisfied with TM Effectiveness When asked how their executives would rate TM s effectiveness, TM practitioners suggest they would be less than complimentary. An open question is whether an organization's focus on an area leads to improved effectiveness. In our survey, TM organizations whose work included an area listed below, often rated the perceived effectiveness higher. Whether that correlation reflects actual results or a self-serving bias is still uncertain. How would your executives/line managers rate the effectiveness of the following TM practices? 7

8 INSIGHT #1 (cont.) Integration of TM Systems May Drive Overall Effectiveness A factor that may underlie an organization s TM effectiveness is the extent to which those practices are integrated into an overall TM system. While just 16% of respondents say their practices are fully integrated into such a system To what extent does your organization have a fully integrated talent management system? (i.e. the parts build upon and interact with one another) those organizations are much more likely to report that senior leaders are pleased with TM effectiveness. Degree to which talent management system is integrated 8

9 INSIGHT #2 In Demand, Premium-priced Specialty The current economic challenges have surprisingly not dented corporations commitment to talent management. While funding for the softer side of HR historically declines during lean times, early indications are that companies will maintain or even increase expenditures on TM in We ll see if companies can maintain that commitment over the next 12 months. A Growing Commitment More than 75% of all surveyed firms indicated a commitment to either increase spending on TM in 2009 or hold it steady. The good news from this finding is that perhaps companies have learned from the last economic downturn that short term cuts in TM result in long term pain. The bad news is that this investment may not yield the expected return given the findings in Insight #1. In 2009, do you expect your company s spending on talent management (not including staff) will... A Shallow Pool Starts to Deepen Nearly two-thirds of respondents still find it very difficult to source senior TM talent, but those figures shift meaningfully at the Director and Manager levels. Especially dramatic is the year-over-year shift in Director availability. In our 2007 survey 72% rated their availability as Very Difficult while just 42% felt that way in How difficult is it to find high quality talent management staff when recruiting externally at the following levels? Impossible they don t exist Very difficult very few quality individuals exist Average it takes a while but we find what we need Relatively easy plenty available when we want them VP/SVP 4% 61% 30% 4% Director 0% 42% 49% 9% Manager 0% 15% 68% 17% Other Professional Staff 0% 11% 61% 29% 9

10 INSIGHT #2 (cont.) How We re Paid A pay premium of 5% - 30% exists for all levels in formal TM groups compared to those in Other TM groups. This premium suggests an expectation that higher value will be delivered an expectation that may not be justified given the lack of effectiveness shown in Insight #1. Senior Vice President/ Executive Vice President* Formal TM Other TM Base Salary: $278 $231 Total Cash: $401 $306 Total Direct: $511 $358 Vice President* Formal TM Other TM Base Salary: $205 $190 Total Cash: $289 $257 Total Direct: $347 $302 Director* Formal TM Other TM Base Salary: $142 $134 Total Cash: $181 $163 Total Direct: $204 $188 Manager* Formal TM Other TM Base Salary: $105 $100 Total Cash: $118 $116 Total Direct: $121 $126 * All figures are median levels for Formal TM groups in North America. Responses were for average compensation for TM employees at each of the levels. TC = Total Cash Compensation. TDC = Total Direct Compensation 10

11 INSIGHT #3 Elite Clients, Narrowing Focus While our survey participants were almost evenly split between those with a formal TM group (51%) and those without (49%), their work and their client focus differed significantly. Those with a formal TM group were more narrowly focused from a client and task perspective. Who We Serve CEOs, executive teams and senior leaders are more likely to be supported by those in formal TM groups. More than 70% of formal TM groups had the CEO and their team as a primary client (vs. 46% by other TM groups) while an amazingly high 99% of formal TM groups supported other senior leaders (vs. 81% of other TM groups). What We Do Formal TM groups focus on activities that accelerate development and ensure a deep talent bench (complete chart in the Appendix). One key question that remains unanswered by our data is whether talent acquisition is a part of TM. Just 49% of all respondents said that talent acquisition was a service of their TM group. 11

12 INSIGHT #3 (cont.) How We re Structured A strong relationship (R 2 =.44) exists between the size of an organization and the number of TM staff at the manager level or above. As organization size increases by each 10,000 employees, one additional talent management manager is added. How We Work No consistent practice exists for how TM works with their HR teammates to serve clients. Overall, about half of TM groups work directly with clients and half work through their HR generalist 12

13 APPENDIX 13

14 ABOUT THE PARTICIPANTS In 2008, 164 individuals across nearly every industry and geography participated Number of Employees Responded for Has a group formally referred to as Talent Management For those with a formal TM group, how long that group has existed Average: 2.7 years Revenue of participating firms (in billions USD) Participants Location Region North America 83% Western Europe 8% Asia Pacific 6% Central/Eastern Europe 1% Asia Pacific (incl. India) 2% 14

15 TM RESPONSIBILITIES Talent Management in your company is responsible for 15

16 ABOUT THE AUTHORS Marc Effron founded the New Talent Management Network in 2006 to help Talent Management professionals shape their emerging profession. Since its inception, the NTMN has grown to more than 700 members. Marc s previous research efforts includes creating and managing the Top Companies for Leaders study, now published by Fortune magazine. He is the co-author of Leading the Way and Human Resources in the 21st Century, and is writing One Page Talent Management, to be published in 2010 by Harvard Business School Publishing. Marc has written chapters for numerous HR and leadership books and is a frequent speaker at human resource conferences. He is currently VP, Talent Management at a Fortune 500 company. You can reach Marc at marc@newtmn.com or Richard S. Wellins, Ph.D., is a Senior Vice President at DDI. He leads DDI s Center for Applied Behavioral Research and consults with clients worldwide on talent management issues. He has written for more than 20 publications and published six books, including the best seller Empowered Teams: Creating Self-Directed Work Groups That Improve Quality, Productivity, and Participation. He has made dozens of presentations at numerous professional conferences around the world. His research has been featured in Fast Company, The Wall Street Journal, CNBC, Fortune, and numerous international publications. He recently served as a judge for CNBC s Asian Business Leader of the Year Award Program involving interviews with over 120 CEOs across eight countries. 16

17 A SPECIAL THANKS TO The New Talent Management Network wishes to thank Development Dimensions International and BRANDEMiX for their in-kind support of this research! Development Dimensions International, Inc. It s a grow-or-die marketplace. And having the right talent strategy is crucial. Development Dimensions International will help you systematically and creatively close the gap between today s talent capability and the people you will need to successfully execute tomorrow s business strategy. We excel in two areas: (1) Designing and implementing selection systems that enable you to hire better people faster, and (2) Identifying and developing exceptional leadership talent critical to creating a high-performance workforce. DDI is all about giving you the kind of business impact you want that s what we call realization. The work we do together is tied to your organization s strategies and becomes part of your business and your culture. This gives you a solution with long-term sustainability. And if your business is multinational, DDI has precisely the kind of global resources needed to implement your talent initiatives effectively and consistently worldwide. What are the results of a sound approach to talent management? New markets conquered, delighted customers and the next hot product launched successfully giving you the ultimate competitive advantage. Please visit BRANDEMiX BRANDEMiX is an independent marketing/communications company that focuses exclusively on branding for business results. We create and implement aligned advertising and internal communications programs for companies of all sizes and connect employees, consumers and investors to corporate culture, goals and vision. Through focus groups, quantitative research, or simply a brand audit of current efforts, our unique methodology and top creative talent will guarantee seamless, credible communications that inform and motivate through every touchpoint in a company s onboarding process. Whether the final results are global websites, recruitment/training materials or ongoing internal communications, each employee will understand the brand, the corporate values, the business strategies and how they fit in. Our Mission To develop customized strategies and communications that support organizational initiatives, and attract, inform and engage target audiences. We will consider all media, messaging, technology and trends and use this information to provide highlevel solutions and high-touch service on demand. In doing so, we will build brand equity for our clients and loyal bonds with their target populations. BRANDEMiX Value Strategy, Creative Execution, Project Management BRANDEMiX is a certified Woman-owned Business Enterprise. Please visit Jody Ordioni, President 17