Strategic Talent Management Survey Results 2014 Striving for long-term success
Foreword Talent management has been a key organisational priority since it first entered the human resource management rhetoric in the late 1990s. It would certainly be unusual to read any HR magazine or attend any HR conference without some mention of talent management practices. In essence, talent management is about having the right people at the right time; about putting in place (HRM) systems and practices that allow an organisation to identify, attract, develop, retain and reward talented people in such a way that the organisation can fill key and critical roles effectively (Parry & Tyson, 2014). However, the nature of talent management has changed dramatically since its inception. Factors such as technological advancement, the global economic downturn and an increased emphasis on data-driven decisionmaking have led to the development of new approaches and priorities within the talent management arena. Talent management practice has diversified so that organisations have the opportunity to manage their talent in different ways. A younger generation of employees has become a big part of the workforce, bringing with it a revised set of attitudes and work preferences. With this generation has emerged a focus on organisational justice and social responsibility that has led to many employers incorporating these ideals into their corporate cultures. In addition, our understanding of how to engage with employees has grown, thus affecting the way that employers manage and retain talented employees. The purpose of this report is to examine the current priorities and practices within talent management. In particular, we will look at the core issues and drivers of talent management strategies, the perceived effectiveness of talent management activities and the adoption of technological systems and HR analytics within this area. The aim of the report is therefore to allow employers to benchmark should be all themselves against other organisations talent management practice and to provide guidance to employers in developing their talent management programmes. 2
Methodology Between October and December 2014, HR and talent management professionals across a broad range of industries and countries were invited to complete an online survey about how their organisation is approaching talent management; specifically their current priorities in this area and their policies and practices for managing talent. In total, 546 HR and talent management professionals from different organisations participated in this research. 159 of these were based in the UK, 93 in Australia and 37 in New Zealand the remainder were based in a range of countries across the globe. Our report focuses therefore mostly on European countries and the Asia-Pacific region. The majority of responding organisations (66%) were in the private sector, with 20% in the public sector and 9% in the not for profit sector. 31% of respondents worked for organisations with over 1,000 employees and 41% for organisations with fewer than 250 employees. This report presents the overall findings for all countries combined. Where there are large differences between these and the UK or Australia/ New Zealand, they are highlighted in the text. 3
Key Findings 1. Less than half of organisations have a talent management strategy and over a third of those think their strategy is not working well Less than half of our respondents had a talent management strategy at all and 29% said that while they had a strategy, it wasn t working well. However, almost a third of respondents stated that they would like to introduce a strategy within the next two years. 2. Overall, organisations are increasing their spend on training and development, performance management and succession planning and reducing their spend on recruitment Overall, our results suggest a shift away from expenditure on external recruitment and towards an approach of growing your own as respondents expect to increase spend on training and development and reduce spend on external recruitment. Organisations were also planning to increase their spending on performance management and succession planning. 3. Only one in five organisations are prepared for the departure of senior leaders Only 19% of our responding organisations stated that they were very or quite prepared for the departure of senior leaders. This is reflected in a general lack of focus on succession planning. 4
4. Employers are not making the most effective use of HR technology to support talent management Only 17% organisations said that HR technology was supporting their talent management strategy to a great extent or completely. This is probably due to a tendency to primarily use HR technology to support or automate administrative or transactional processes and a failure to integrate HR systems with each other or with wider organisational systems. 5. The highest priority for investment in technology is in performance management 39% of respondents stated that performance management was within their top three priorities for investment on HR technology this underscores the importance of having robust performance management systems for effective talent management 6. Less than half of organisations are using HR analytics to link HR activity to business performance Despite the attention paid to HR analytics over recent years only a handful of organisations are using data to connect HR practices to business performance. This might be due to difficulty in extracting valuable data from HR systems. 5
1. Less than half of organisations have a talent management strategy and over a third of those think their strategy is not working well
1. Less than half of organisations have a talent management strategy and over a third of those think their strategy is not working well Despite the attention paid to talent management by HR consultants and the HR media, only 46% of responding organisations said that they had a talent management strategy and only 29% said that they had a talent management strategy that was working well. These figures were similar in the UK only with 44% having a talent management strategy and only 28% having a strategy that was working well. In Australia/ New Zealand however, while a similar proposition of organisations had a talent strategy, a slightly higher proportion said that they had a strategy that was working well (33%). Almost a third of organisations (32%) (38% in the UK and 35% in Australia/New Zealand) were planning to introduce a talent strategy within the next two years. The relatively high proportion of companies planning to introduce a talent management strategy is in line with our findings in relation to expenditure on talent management over the next three years. Almost half of the responding organisations (46%) said that they planned to increase their overall talent management budget. In the UK and Australia/New Zealand a lower proportion (37%) expected to increase their overall talent management budget. Figure 1: Percentage of organisations with a talent strategy (% organisations) We have a talent strategy and it is working well 29% We have a talent strategy but it is not working well We do not have a talent strategy but we are planning one within the next 2 years We do not have a talent strategy but we would be interested in introducing one 17% 17% 32% We do not have a talent strategy and have no intention of introducing one 5% 0 5 10 15 20 25 30 35 7
2. Overall, organisations are increasing their spend on training & development, performance management and succession planning & reducing their spend on recruitment 8
2. Overall, organisations are increasing their spend on training & development, performance management and succession planning and reducing their spend on recruitment We have a talent strategy and it is We have We have a talent a talent strategy strategy and and it is it is We have a talent strategy and it is working well working working 29% well well working 29% 29% well We have a talent strategy but it is not working well The results suggest a shift in talent 17% We do not have a talent strategy but we management are planning one within expenditure the next 2 years away We do not have a talent strategy but we from would recruitment be interested in introducing to one training and 17% development We do not have a talent with strategy and 19% respondents have no intention of introducing one 5% expecting to reduce their expenditure on external recruitment and 57% expecting to increase their expenditure on training and development. 0 5 10 15 20 25 30 35 We have We have a talent a talent strategy strategy but it but is not it is not working well working well these areas in the next three years. 17% 17% This We do not have a talent strategy but we demonstrates are planning 32% one within the next the 2 years importance of these We do not have a talent strategy but we activities would be interested in introducing driving one performance 17% within 17% an We do organisation. not have a talent strategy and 5% 5% We do not have a talent strategy but we are planning one within the next 2 years We do not have a talent strategy but we would be interested in introducing one We do not have a talent strategy and have have no intention no intention of of introducing one one Figure 2: Anticipated increase/decrease in spending in the next three years 32% 32% 0 0 5 5 10 10 15 15 20 20 25 25 30 30 35 35 We have a talent strategy but it is not working well We do not have a talent strategy but we are planning one within the next 2 years We do not have a talent strategy but we would be interested in introducing one We do not have a talent strategy and have no intention of introducing one Interestingly, N/A in the Increase UK the increase Stay the in same Decrease N/A N/A Increase Stay Stay the the same same N/A Decrease In spending on training and development is much Employee lower engagement than average with only Employee engagement Employee engagement 43% organisations expecting to increase Retention Retention Retention spending in this area and 48% expecting Recognition Recognition Recognition spending to remain the same. 21% Training & development of UK organisations plan to reduce Training & & development Training & development spending Succession external planning recruitment. Succession planning Succession planning However, Performance this management might be a reflection of Performance management Performance management the lower Workforce proportion planningof UK respondents Workforce planning Workforce planning expecting to increase their talent budget Employer brand Employer brand brand Employer brand overall. In Australia/New Zealand, a External recruitment External recruitment External recruitment larger proportion (61%) expected to Reward strategy increase their spending on training and Reward strategy Reward strategy development, Overall talent with budget 22% organisations Overall talent talent budget Overall talent budget reducing their spend 0on external 10 20 30 40 50 60 0 0 10 10 20 20 30 30 40 40 50 50 60 60 0 recruitment. Performance management and This move away from expenditure on external recruitment is, however, in succession planning were also important Retention of key talent Retention of of key key talent talent 45% Retention of key talent contrast to the current priorities or priorities for talent management Recruitment of key talent Recruitment of of key key talent talent 37% Recruitment of key talent 373 issues that organisations are focusing spending with 47% and 46% respectively Use of technology and automation 12% Use Use of of technology and and automation 12% 12% Use of technology and automation on in talent management. The largest expecting to increase their spending in Succession planning Succession planning 37% Succession planning 373 proportion of organisations were Long term workforce planning Long 18% Long term term workforce planning 18% Long 18% term workforce planning Performance management Performance management 30% Performance management 30% Providing training and development Providing training 24% and and development Providing training 24% 24% and development Providing Brought competitive to you pay byand reward Providing 14% competitive pay pay and and reward Providing 14% 14% competitive pay and reward Engagement of employees Engagement 24% of of employees 9 Engagement 24% 24% of employees Investment in talent from senior leadership Investment 14% in talent in talent from from senior leadership Investment 14% 14% in talent from senior leadership
0 5 10 15 20 25 30 35 focused on retention of key talent (47%), followed by recruitment of key talent N/A Increase (37%) and succession planning (37%). Interestingly, while the proportion of 38% of respondents stating that this was one of their top three priorities, Stay the same Decrease alongside succession planning (38%) and recruitment of key talent (31%). organisations Employee in the UK engagement with a key focus on retention was similar Retention to the overall average (47%) a higher proportion saw Recognition recruitment of key talent and succession Training & development planning as a priority (48% and 47% respectively). In Succession Australia/New planning Zealand, retention of Performance key talent management was also the most commonly stated priority/issue Workforce planning for talent management (42%). However, Employer brand pro-actively managing organisational culture was also External seen as recruitment important with It is interesting here to note that less than a quarter of organisations saw employee engagement as a key priority or issue for them (24%), despite the current focus on this area in HR media and consultancy. This proportion was even lower in the UK with only one in five (20%) seeing employee engagement as one of the top three issues or priorities for their organisation. Reward strategy Overall talent budget 0 10 20 30 40 50 60 Figure 3: Current issues/priorities for talent management (% organisations) Recruitment of key talent Use of technology and automation Succession planning Long term workforce planning Performance management Providing training and development Providing competitive pay and reward Engagement of employees Investment in talent from senior leadership Proactively managing the organisational culture Retention of key talent 45% 37% 12% 37% 18% 30% 24% 14% 24% 14% 20% 0 10 20 30 40 50 12% 6% 23% Very prepared Quite prepared 10
3. Fewer than one in five organisations are prepared for the departure of senior leaders 11
Reward strategy Overall talent budget 0 10 20 30 40 50 60 3. Fewer than one in five organisations are prepared for the departure of senior leaders Only 18% of the Retention organisations of key talent surveyed are not prepared for the departure of 45% said that they Recruitment were very of key or talent quite prepared Use of technology for the departure and automation of senior leaders within Succession their organisation. planning Long term workforce planning Almost a quarter (23%) said that they Performance management were not prepared and 32% were only a Providing training and development little prepared. This paints a worrying Providing competitive pay and reward picture. In the UK in particular, with Engagement of employees 28% of respondents stating that they Investment in talent from senior leadership Proactively managing the organisational culture senior leaders and 31% stating that they 12% are only a little prepared. In Australia/ New Zealand 19% respondents said that they were not prepared and 35% that they were a little prepared while only 12% said that they were quite or very prepared for the departure of senior 14% leaders. 14% 18% 24% 24% 20% 30% 37% 37% 0 10 20 30 40 50 Figure 4: Level of preparedness for the departure of senior leaders (% of organisations) 12% 6% 23% Very prepared Quite prepared Somewhat prepared 27% 32% A little prepared Not prepared 50 Formal Informal None 40 36% 42% 12 39% 38%
Performance management Providing training and development Providing competitive pay and reward Engagement of employees The reasons behind this lack of Investment in talent from senior leadership preparedness might be explained Proactively managing the organisational culture through the lack of focus that organisations seem to have on Long term workforce planning 18% respondents said that their organisation used succession planning to a great 12% 23% or very great extent, suggesting that they are not putting their resources into this area. In addition, only about a third (34%) of organisations had 27% formal succession planning for senior 32% 30% 24% 14% 24% leaders. In both the UK and Australia/ 14% New Zealand, this was even lower 20% with only 28% and 31% of responding 0 10 20 30 40 50 organisations respectively having formal succession planning. Despite the fact succession planning in place for senior that 37% of organisations said that managers. This might also explain why succession planning was one of their almost half of organisations (46%) were main issues or priorities, only 22% of increasing their spending on succession 6% planning as they have realised their lack of preparedness Very prepared for key people leaving the organisation, they have also become Quite aware prepared of the inability of their systems to plan for succession Somewhat prepared effectively. A little prepared Not prepared Figure 5: Existence of succession planning processes (% of organisations) 50 Formal Informal None 42% 40 30 34% 36% 30% 27% 31% 39% 38% 23% 20 10 0 Senior leadership Middle management Technical/specialist 3% 13 14% Completely
4. Employers are not making the most effective use of HR technology to support talent management 14
4. Employers are not making the most Formal Informal effective use of HR technology to support 42% talent management 50 None 40 30 20 10 0 34% 36% The picture that our results paint in relation to HR technology suggests that 30% organisations are not getting the most benefit from their use of HR technology. their talent strategy at all was slightly higher at 39%, with only 12% saying that their HR technology supported (see figure 7). their talent strategy to a great extent or completely. There are two possible explanations for this. The first lies in the level Indeed, only 17% of organisations said of sophistication of the use of HR that HR technology supported their technology. If we look at the activities talent strategy to a great extent or for which organisations are using completely; with almost a third (32%) technology, we can see that technology stating that technology did not support use is focused mostly on administrative their talent strategy at all. In Australia, or transactional activities such as time the proportion of respondents stating and attendance, training administration that their HR technology did not support and e-learning, rather than the more Senior leadership 27% 31% Middle management 23% sophisticated uses such as succession 39% 38% Technical/specialist planning and performance management Figure 6: Degree to which HR technology supports talent strategy (% organisations) 3% 14% Completely 32% To a great extent 30% 21% Partially To a lesser extent Not at all 15
Training administration 21% Completely N/A e-learning 14% Not at all External recruitment External recruitment A second reason for the failure of 3% 32% To a great extent No intentions to use technology Succession planning Completely Partially 14% Figure 7: Elements 30% of talent management HR technology used for (% organisations) Do not use technology but would like to 32% To a Workforce planning To great a lesser extent extent 21% Partially External recruitment Not at all Supported by technology 30% Performance management To a lesser extent 21% Compensation e-learning Not at all N/A Fully automated Job descriptions Training administration No intentions to use technology Time and attendance Succession planning 0 10 20 30 40 50 Do not use technology but would like to Workforce planning Performance management External recruitment Supported by technology Performance management N/A e-learning Compensation 50 Fully N/A automated e-learning 46% 45% Fully Training administration Job descriptions Training administration No intentions to use technolog No intentions to use technology Time 40 and attendance Succession Succession planning planning Somewhat 0 10 20 30 40 50 Do not use technology Do not use but technology would like tobut wou Workforce planning Partially Workforce 30planning 20% Supported by technology HR or business systems. A Almost little Supported half by technology 20 17% Compensation organisations to reap the benefits of HR of respondents stated that Fully their HR 50 Not at automated Compensation all 46% technology 45% within talent management technology systems were Fully not at all Fully automated 11% 11% Job descriptions 10 might be a lack of integration 7% Job descriptions between integrated into each 6% other (45%) or into Time 40 and attendance Somewhat talent management systems and other wider organisational systems (46%). Time and attendance 0 10 20 30 40 50 0 Partially 30 Into each other Into wider organisational systems 0 10 20 30 40 50 A little 20% 19% Figure 8: Integration of talent management systems 18% (% organisations) 20 17% 50 Not at all 59% ance management 46% 45% 11% 11% Fully 42% E-learning 10 7% 6% 50 ing administration 40 46% 46% Somewhat 45% Fully 25% ccession planning 0 Partially Into each other 24% orkforce planning Into wider organisational systems 40 30 Somewhat 15% ternal recruitment A little 20% 19% 13% 18% Compensation 20 17% Partially 30 Not at all 12% 59% ance Job management descriptions 11% 11% 22% 42% e and attendance E-learning A little 10 7% 20% 6% 19% ing administration 0 10 20 30 40 18% 46% 20 17% 50 60 25% ccession planning Not at all 0 11% 11% 24% orkforce planning Into each other Into wider organisational systems 10 7% 15% ternal recruitment 6% 13% Compensation re the execution 12% Job descriptions To 59% ance outine management processes a very great extent 0 22% 42% e and attendance E-learning Into each other Into wider organisational systems ess and improve ing administration 0 10 20 30 40 46% 50 60 HR function To a great extent 25% ccession planning osts of providing 24% orkforce planning HR services 59% nagement 15% ternal recruitment To some extent 42% E-learning ute to decisions 13% Compensation 16 business re the execution strategy 12% inistration 46% outine Job descriptions processes To a very great extent 18% 19%
5. The highest priority for investment on technology is in performance management 17
Workforce planning External recruitment Compensation 5. The highest priority for investment on Job descriptions technology is in performance management Time and attendance 0 10 20 30 40 50 Our results show that spending on HR technology in the near future is going to focus mostly on underpinning successful talent management. Consider that performance management is critical to performance management with 59% 50 45% of respondents naming this as one of their top three priorities for technology 40 spend compared to 46% on training administration and 42% on elearning. 30 This finding reinforces the importance of performance 20 management 17% in 20% the establishment of a high performance 46% culture, the ability to identify top talent and potential successors, helping identify learning and development opportunities, and is at the centre of the organisation s ability to see how line managers are managing their people. 19% 18% 11% 11% Do not use technol Supported by tech Fully automated Fully Somewhat Partially A little Not at all 10 7% 6% 0 Figure 9: HR Technology investment Into each priorities other (% organisations) Into wider organisational systems Performance management 59% E-learning 42% Training administration 46% Succession planning Workforce planning 24% 25% External recruitment 15% Compensation Job descriptions 12% 13% Time and attendance 22% 0 10 20 30 40 50 60 Measure the execution of routine processes To a very gre Assess and improve HR function To a great ex Measure costs of providing HR services Contribute to decisions about business strategy 18 To some ext
6. Less than half of organisations are using HR analytics to link HR activity to business performance 19
6. Less 40than half of organisations are using HR analytics to link HR activity to business 30 performance 20% The use of HR analytics to link HR activities to wider organisational performance has received a lot of attention over recent years. However, our research suggests there are still analytics to connect HR practices to only a handful of organisations that Performance management are managing to achieve this. In fact, E-learning 20 10 0 less than one in five (16%) of our Training administration 50 46% 45% Fully respondents stated that they were Succession planning using HR analytics to a great or very Workforce planning 15% great extent to connect HR practices External recruitment 17% Into each other 13% Compensation 12% Job descriptions Time and attendance 11% 7% 25% 24% 22% 18% 19% to business performance. This is even lower in the UK and Australia/ New Zealand with only 8% and 11% of Into wider organisational systems organisations respectively using HR business performance. While some Somewhat Partially A little Not at all organisations were using HR metrics 42% for some purposes (see figure 8) 43% of 46% respondents said that they were using 59% HR analytics to a lesser extent or not at all across all of the purposes suggested. 0 10 20 30 40 50 60 11% 6% Figure 10: Use of HR analytics by purpose (% organisations) Measure the execution of routine processes To a very great extent Assess and improve HR function Measure costs of providing HR services Contribute to decisions about business strategy Evaluate effectiveness of HR programmes Connect HR practices to business performance To a great extent To some extent To a lesser extent Not at all Assess HR programmes before they are implemented Assess the feasibility of new business strategies 0 5 10 15 20 25 30 35 40 17% 3% 22% Very easy Quite easy 20
before ility ented of ategies ility of ategies The low level of use of HR analytics might be because employers find it difficult to extract the data that they need from their technology systems. Indeed, over half of the respondents said that they found it very or quite difficult to extract valuable HR analytics and reports from their HR systems. 0 5 10 15 20 25 30 35 Not surprisingly therefore, well over half (57%) agree to a great or very great extent that HR analytics could be improved in their organisation. 0 5 10 15 20 25 30 35 Figure 11: Ease of extracting valuable HR analytics and reports from HR systems 3% (% Organisations) 17% 17% 3% 22% 22% Very easy Very Quite easy easy Quite Neither easy difficult or easy 29% 29% Neither Quite difficult difficult or easy 29% 29% Quite Very difficult difficult Very difficult Figure 12: Percentage agreeing that HR analytics could be improved in their organisation (% Organisations) 17% 6% 6% To a very great extent 17% 6% 6% To To a very great great extent extent 31% To To a some great extent extent 40% 31% To To some a lesser extent extent 40% To Not a at lesser all extent Not at all 21
The case for an integrated approach The evidence suggests that many organisations are only just beginning to define a holistic talent management strategy, which encompasses previously isolated programmes. An integrated approach supports the longer term needs of the business, and helps provide a complete talent management experience for an employee from their on-boarding process to their future career path, with the right level of support and development on the way. However, for many there is a legacy of a piecemeal approach in the way HR technology is supporting the function. The result is that technology is currently focused on supporting more administrative and completely siloed process elements. For a talent strategy to be truly be aligned and support the objectives of the business, its needs technology to do the same. To do so as effectively as possible, technology needs to be adopted in a more holistic manner, and enable business to better identify, plan and manage talent. The results demonstrate that Performance Management is the highest priority for investment in HR systems. This is a wise focus, since getting performance management right is the lynchpin for a better talent strategy. Having a strong performance management process and system in place creates and alignment between employees and the objectives of the business, supports the critical area of line management, ensures an openness and fairness in the way employees are evaluated and enables reward and recognition based on performance. Crucially, the lessons and data gathered from the performance process inform wider talent strategies including targeting learning, reward, succession planning, recruitment and longer term workforce planning. 22
Viewpoint Nina Mehta Talent Management that builds an engaged and aligned workforce Odds are that you ve probably heard the often used adage, our people are our most valuable asset. It s a well worn phrase that s loudly and frequently asserted and, in many cases, truly believed by company leaders it s just not reflected in their talent management practices. Far too often, organisations simply pay lip service to the expression and fail to understand that it should be firmly entrenched in their culture through their talent management processes, practices and programmes. It s not just an important consideration. It s an imperative. The results of this survey demonstrate that organisations globally are beginning to pay more than lip service to this tenet, and putting more focus on talent management practices that support the development of a world class workforce. Not surprisingly, there are many facets to building a world class workforce. Combined, these facets foster a workforce that delivers growth in business results, and lasting competitive advantage for organisations. Halogen has broken these components down into a talent management framework that starts with an intentional corporate culture, which in turn influences the strategy and execution for your organisation s: Culture Communication Leadership Development Engagement Talent Acquisition Career Management Total Rewards Performance Management Learning And Development Workforce Planning 23