Effective Workforce Development Starts with a Talent Audit By Stacey Harris, VP Research September, 2012 Introduction In a recent survey of CEO s, one in four felt they were unable to pursue a market opportunity or had to cancel strategic initiatives because of talent constraints. 1 How many times has your leadership felt they ve missed a goal due to lack of talent? Organizations face tough talent questions daily, questions such as: Who are our high potentials? Where are the talent gaps in our business? How strong is our leadership bench strength? Are we making the best use of our existing talent? Are we getting the highest returns from our training dollars? If your organization can t answer these questions, warning bells should be sounding. Missed opportunities and slipping goals are just the tip of the iceberg. Beneath these questions lies a bigger concern of long term business sustainability. Every journey starts with a single step. Obtaining meaningful understanding of your organization s strengths, weaknesses and potential requires an honest assessment of your workforce. An effective way to start a journey towards relevant workforce data and better business decisions is to start with a talent audit. Organizations regularly conduct financial audits, risk audits, and technical audits, but talent audits are often overlooked. A talent audit helps identify skills gaps, development needs, and talent opportunities for your organization. It ensures that investments in development, learning, and hiring are based on data versus opinions. The term talent is subjective, but it assumes that someone has the right competencies, background, personality traits, and motivations to exceed expectations in a given role. An effective talent audit provides concrete details on how to best fill the talent gaps. Topics in this research brief include: The value of defining talent; Assessing skills, experience, personalities, and motivations; Addressing development and succession needs; Hertz: driving talent development; Key practices for effective talent audits. 1 PWC, 15 th Annual CEO Survey, 2012 2012 Brandon Hall Group. Licensed for distribution by SHL. 1
The Value of Defining Talent We talk a great deal about talent. CEO s believe they have a talent gap. HR Leaders struggle to address talent challenges. Operation leaders rarely spend enough time managing talent. With all this focus it is hard to believe that many organizations still haven t taken the time to define what talent is within their organization. Some organizations feel that every employee is considered talent, while others define talent narrowly as only senior leaders or critical roles. Defining talent is about understanding what people resources are needed to meet a clear business goal. Talent is identified when an organization understands the impact each job role has on their business outcomes and clearly knows which skills, behaviours, and experiences are required to meet their expected goals. Defining how your organization needs to manage that talent is a business strategy, unique to each organization. The term Talent Management often refers to an organization s stated approach to managing the required supply and demand of talent to achieve their business goals. It usually includes the integrated processes involved in attracting, assessing, motivating, rewarding, developing, retaining, and optimizing that talent. Figure 1: Integrated Talent Management Source: Brandon Hall Group, 2012. Why should your organization focus on talent management? When you focus on the value of your talent, it allows you to optimize your people s performance and expand their capabilities. It allows an organization to break from the constant need to always hire critical talent versus developing talent from within. It defines succession plans and high potential roles optimized for your business goals. These strategies, when done well, help engage a workforce and create ownership and drive within employees. Assessments are what we leverage to better understand our workforce and their capabilities. They are the data gathering tools that give us the insight we need to make better decisions for ourselves and the businesses we support. 2012 Brandon Hall Group. Licensed for distribution by SHL. 2
Assessing Holistically The top complaint for both talent and development professionals in most organizations is that assessments and their data are often used as disconnected elements within HR and learning processes. Even when organizations begin to understand the value of integrating talent management processes, they often overlook the power of data gathered through assessments. Assessments as a part of an integrated talent management program allow organizations to do more than simply select suitable candidates or create development plans rather, when used holistically they allow an organization to assess the total talent situation. In a truly integrated assessment strategy a business will not only assess what its workforce can do but also how they do it and their potential to do more. A single assessment provides a limited view of a person s abilities, possibilities, and opportunities. However, it also creates opportunities for more mistaken conclusions. Multiple assessments as part of an assessment strategy reduce errors and increase effectiveness of the assessment outcomes. A job analysis that only takes into consideration the skills, tasks, and cognitive requirements of a job only provides half the story. It is important to understand the culture, behavior expectations, team environment, realistic motivators, leadership requirements, and social factors related to the job and the persons in that role. In Figure 2 below, you ll see an example of a holistic assessment model that takes into consideration multiple factors. Figure 2: Holistic Assessment Model Source: SHL, 2012. An assessment approach that is siloed and only considers a single position -- or even worse, a strategy that is focused on adjusting the outcomes of only a single element of the talent management process -- creates a limited view. It could also create unintended outcomes, and allow companies to miss opportunities. 2012 Brandon Hall Group. Licensed for distribution by SHL. 3
Assessing Development Needs In some cases, organizations need to take a targeted approach to assessing development and talent needs, especially when they begin to see red flags such as: Employees struggling to succeed at their jobs Lack of succession bench strength and key role backups Slipping business goals Low levels of employee confidence Poor employee engagement metrics Observations of missed opportunities When these situations begin to appear, it may be time for a talent audit. A talent audit is a snapshot of an organization s talent which enables the organization to understand their talent at a point in time in relation to an organizational objective. It provides a gap analysis to understand where the organization is now against where they need to be in the future. When asked in a recent Brandon Hall Group webinar, only 30 percent of respondents had completed talent audits within their organizations. 2 However, only 13 percent of the respondents conduct audits regularly, while the other 17 percent have done audits for specific reorganization projects. Figure 3: Do you Conduct Talent Audits Today? 4% Yes, we conduct regular talent audits 13% We ve done a talent audit for a 21% specific re-organization project 17% No, but we plan to conduct a talent audit in the future 45% No, we never plan to conduct a talent audit Other Source: Brandon Hall Group, 2012 A talent audit is a critical diagnostic tool for the talent management professional. A full scale talent audit helps companies understand their entire organization and focuses on future hiring and development needs for the entire organization. These are usually conducted in conjunction with an enterprise workforce planning effort. 2 Effective Workforce Planning and Development Starts with a Talent Audit, May 22, 2012, N=39. 2012 Brandon Hall Group. Licensed for distribution by SHL. 4
Outside of a large scale workforce planning effort, a talent audit may also be focused on a specific role or workgroup that requires additional data before decisions can be made concerning the workforce. A talent audit process generally includes: A review of external and internal factors that impact performance; An analysis of key jobs, roles, or workgroup areas under review; An assessment of the existing workforce; Gap analysis of the current workforce and future workforce needs; Roadmap for change and development needs; Defined expected outcomes from actions taken. The performance of individuals at work is influenced by a number of factors, including their required results, competency behaviors, and underlying potential. It is also heavily affected by the social and team relationships they experience every day. Taking account of these factors should lead to a more robust and accurate prediction of employee performance in the future. Selecting your Assessment Tools With a clear understanding of the talent requirements for each role or level within the organization it is possible to begin to define a holistic assessment strategy that provides robust and objective data to inform key workforce decisions. There are many ways to get to a comprehensive view of an employee s current capabilities. The most important factor in selecting assessment tools is to ensure the process is fair, objective, and constructive for everyone involved. As seen in figure four, a holistic assessment model will include multiple assessment tools and data resources. In this example, they chose to focus on stadardized approaches to gathering data on employee potential, performance, and behavior. Figure 4: Talent Assessment Approach Source: SHL 2012 2012 Brandon Hall Group. Licensed for distribution by SHL. 5
Example: Assessing for Performance Results The individual s results data can come from the employee s performance management data and business track record. They also chose to include a list of pre-defined Leadership experiences. Organizations often include a recommended career experience inventory, gathered from subject matter experts who are consulted to capture information on the critical experiences that facilitated their own transition into a job role. The end goal is to assess the candidate or employee s actual experience and resulting outcomes to ensure they match the expectations of the role. Example: Assessing for Competence Behaviors Competency measures can provide evidence that individuals have the capacity to demonstrate certain behaviors that are required for the role that they are being assessed against. In this example, data can come from Competency Based Interviews (CBIs), Multi-Rater Assessments, and Simulation Exercises. Competency Based Interviews collect detailed examples of when and how an individual has demonstrated the target competency behaviors in the past. Multi-Rater Assessments solicit a multiple-perspective view on how well an individual has demonstrated the target competency behaviors in his or her current role. Simulation Exercises dip individuals into fictitious scenarios that are designed to elicit certain target competency behaviors that they might not have the opportunity to demonstrate in their day job. Example: Assessing for Potential Measures of potential can provide evidence as to whether individuals have the potential to demonstrate the target competency behaviors for a role and whether they would be a potential fit to a given organization. In the example above, evidence can come from personality, preference, motivation, reasoning, or work styles questionnaires. Personality, motivation, or work style surveys provide a view into what motivates employees. By understanding what motivates employees, senior leaders can unlock their full potential and direct their energies more constructively. Measures of potential can also include numerical, verbal, and inductive reasoning tests which can be used to determine if an individual has the intellectual horsepower to assume the target level of responsibilities. Each assessment perspective performance results, competency behaviors, and potential provides unique and important information about the likely fit of an individual to a target role. Your organization may find that additional factors such as culture, team work, and technical skills may also be included in a full talent audit. By identifying the strengths and gaps in each of these areas, it allows for an objective assessment and more importantly a clear path for employee selection and development. 2012 Brandon Hall Group. Licensed for distribution by SHL. 6
Addressing Development and Succession Needs Once a talent audit is complete, gaps and opportunities will be uncovered. Organizations that clearly define the results an individual needs to deliver in his or her current or future job role can then identify the strengths and development needs of a given individual. Filling the learning gaps starts by building awareness of an individual s strengths, development needs, and required experiences. The next step is to identify potential targets for development. Ideally, this is based on some combination of the needs of the organization and the personal aspirations of the individual. It is easy to think about filling development gaps on an individual level with focused development plans tailored to the individual s needs. In reality, an organization s budget is often stretched too thin to manage wholesale competency upgrades at a program level for every individual. This is where learning and talent management functions need to work hand in hand. An organization s learning strategy should be driven, at some level, by their talent strategy. Understanding the most critical competency gaps allows a learning organization to prioritize their resources. Understanding the multitude of cost-effective development tools allows an organization to expand its learning ecosystem to include a structured approach to previously informal elements. Development can come in many shapes and forms as long as it is always connected back to the business outcomes an organization was looking to achieve from the initial talent audit. Following enterprise and targeted talent audits, organizations have leveraged development tools such as: Coaching and feedback models Targeted mentoring relationships Social collaboration Customized competency based elearning Customized competency based development workshops Rotational assignments Action learning teams It is absolutely critical that this initial brainstorming is sufficiently fleshed out to form detailed action plans for development that outline specific objectives, development, targeted actions, and timelines. Some organizations integrate this into a performance management or succession planning process and others separate the conversations. Either way, it is important to give each person some level of accountability for reviewing this plan at regular intervals with another party. 2012 Brandon Hall Group. Licensed for distribution by SHL. 7
Hertz: Talent Audits that Drive Development For over 90 years Hertz has been a brand name in the car rental business. With over 8,500 locations in over 150 different countries, Hertz depends on key roles within the organization to drive both business and customer satisfaction. In 2009, Hertz joined forces with SHL to conduct a talent audit with their mid-manager level employees. The goal was to drive the needed development required to ensure each employee would be prepared to meet the recently defined strategic objectives laid out for the organization. They wanted to make sure that this critical level of talent within the organization was poised to support and contribute to these broader strategic objectives. They felt a holistic assessment model was the best solution to meet their business goals. The project team started by looking at quantitative and qualitative employee results including the 2009 performance reviews and company Key Performance Indicators (KPI s) such as financial metrics and customer and employee satisfaction metrics. They also identified the critical behaviorbased competencies required for success and developed multiple simulation exercises for the purposes of assessing these critical competencies. Each employee was then assessed for potential as well as work style and reasoning capacity through a series of online assessments. The outcomes were positive on several fronts. First, the organization now had a clear view of the current state of the talent within the midmanagement group as it related to business goals. They had a multidimensional view that allowed them to work with each individual more closely. They had also identified hidden pockets of talent that would have otherwise gone unnoticed within the organization. Finally, they created acceptance across the organization for leveraging assessments as part of the talent management strategy, as the model was quickly picked up and leveraged by other divisions. Most importantly, over 60% of managers and HR Business partners felt better equipped to make promotion and succession planning decision. Over 66% of participants felt the assessment experience helped them improve their leadership skills. 2012 Brandon Hall Group. Licensed for distribution by SHL. 8
Key Practices for Successful Talent Audits Key Practice One When you are conducting a talent audit you need to begin with specific objectives in mind. Conduct a comprehensive needs analysis to determine the critical questions you need to answer with a Talent Audit before you begin the process. These strategic questions should be focused on business outcomes, such as the list below: Do we have the right talent to meet our strategic objectives? Are we making the best use of our existing talent? Who are our high potentials within the organization? Where are the talent gaps in our business? Where should we focus our training spending to get the greatest return? Where are our future managers and leaders? How strong is our leadership bench strength? These initial questions will drive the presentation of results. They are also important in gaining a strong commitment to the role profiled. This ensures active, consistent Senior Leadership involvement from the Business Unit and ensures acceptance of results. Key Practice Two When laying out your talent audit approach, it is important to develop a comprehensive communication strategy. This includes a broad consideration of stakeholders and targeted messaging and may include a FAQ document. Early involvement of internal teams (Executive Sponsor, Bureau Services, Technology, PM, Account Team) helps to avoid confusion, promotes response rates, and improves responsiveness to issues encountered during the assessment process. Key Practice Three To bring an even higher degree of certainty to important workforce decisions, especially where the required behaviors may be different than what an individual is called on to do in their current role, your organization also needs to look at potential. Potential can give insight ahead of time into how someone is likely to perform in a target role or level. Potential measures are qualities that are innate and somewhat stable, such as personality, motivation, and cognitive ability. Key Practice Four To realize the objectives, it is important to build comprehensive post-assessment output tools. This involves creating resources for stakeholders, including your leadership, managers, participants, and Human Resource department. In the output from the assessment, it is important to include both the Preliminary and Final presentation of results. This strengthens the impact of the results, and clarifies the scope of the project and results. 2012 Brandon Hall Group. Licensed for distribution by SHL. 9
Conclusion Organizations constantly struggle to balance the need to hire or develop talent from within an organization. Without a clear understanding of who your talent is and what their capabilities are, it is unlikely that an organization will ever understand the value of developing that talent from within. Managing talent like you manage any critical resource within your business requires constant auditing and evaluation. Ensuring that the process for evaluation and assessment is objective and fair ensures the outcomes will be constructive and focused on growth and opportunities. Key steps, as seen in figure five, include: Profiling critical roles, Delivering assessment tools, Turning assessment outputs into action plans. Figure 5: Example Talent Audit Plan Source: SHL 2012 Holistic assessment models provide deeper and broader views of an employee s capabilities, giving both the organization and the employee the insight required to make positive decisions. The ultimate goal is to take action on the data. The action should drive further business outcomes and enhance your workforce bench strength. 2012 Brandon Hall Group. Licensed for distribution by SHL. 10
About Brandon Hall Group With more than 10,000 clients globally and 20 years of delivering world class research and advisory services, Brandon Hall Group is the most established and well-known research organization in the performance improvement industry. We conduct research that drives performance and provides strategic insight for executives and practitioners responsible for growth and business results. Brandon Hall Group has an extensive repository of thought leadership research and expertise in our primary research portfolios Learning and Development, Talent Management, Sales Effectiveness, Marketing Impact, and Executive Management. At the core of our offerings is a Membership Program that combines research, benchmarking, and unlimited access to data and analysts. Our members have access to research and connections that help them make the right decisions about people, processes, and systems, coalesced with analyst advisory services tailored to help put the research into daily action. The Value of Membership The Brandon Hall Group Membership Program encompasses comprehensive research resources and an array of advisory services. Our Membership Program provides: Cutting-Edge Information Our rigorous approach for conducting research is constantly evolving and up-to-date, providing your organization with current and future trends, as well as practical research insights. Actionable Research Your membership includes advisory services and tools that are research driven and provide you a breakthrough approach to addressing immediate challenges and opportunities inside your organization. Customizable Support Whether you are an executive or entry-level practitioner our research and analyst insights can be leveraged at an individual level and across the entire organization. We realize that every organization has unique needs, so we provide multiple analyst and research access points. Community of Peers We realize the value of connecting with your peers and being part of a community that is focused on continuous improvement. Your membership provides you with personal connections to fellow professionals. Unlimited Access Every member of your team has the ability to utilize research, best practices, and advisory services when they need it most. To learn more about Brandon Hall Group, please call us at (561) 865-5017 or email us at success@brandonhall.com. 2012 Brandon Hall Group. Licensed for distribution by SHL. 11