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The TalentForecastPart 3: Beyond hire and the long-term impact of talent acquisition onan organization.

A global study to uncover what today’s talent acquisition leaders can tell us abouttomorrow’s workplace.

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Traditionally, the job of a talent acquisition professionalended when a position was filled. In most cases, theyperformed in a transactional manner, responding tothe ongoing needs of hiring managers and seniorleaders to fill positions on a case-by-case basis. Oncethe candidate was hired, the recruiter moved on to thenext position.

Years ago, that type of transactional approach mayhave been sufficient as companies tended to changestrategies less frequently and technology moved at aslower pace. Now, with change advancing at abreakneck speed and the war for talent as intense asever, a more strategic approach is needed. Talentacquisition needs to be about more than just cost perhire.

Moreover, human capital is the most valuable assetwithin organizations and the source of competitiveadvantage—which means that a high-performingtalent acquisition function is essential to buildingsustainable organizations.

There are signs that recruitment leaders andbusinesses are looking at talent acquisition morebroadly. The focus on quality of candidate, retention,and performance of hired candidates continues toincrease, but with the lack of internal candidates

equipped to manage the leadership challenges of the21st century, more needs to be done.

Senior leaders and talent professionals need to workmore closely together to develop long-termrecruitment and internal development plans to ensurethat organizations have talent that is adaptable, agile,and capable of executing and shifting strategies in anever-changing world.

To explore these issues, Korn Ferry commissioned aglobal survey on talent acquisition. The surveyrevealed that talent acquisition professionals, whilechallenged by competition for talent externally and ashortage of ready-to-promote talent from within, areseeing their role as a more strategic one and looking tobetter connect recruitment with contribution.

No doubt, the talent acquisition job is getting harder.As discussed in the two previous reports in this series,the solution to building a workforce to supportorganizational performance lies in adapting to shiftingcandidate priorities, better alignment with hiringmanagers and senior leaders, and leveragingtechnology to improve performance.

Byrne MulrooneyCEO, Korn Ferry RPO, Professional Search & Products

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Measuring talent acquisitionperformance.

Talent acquisition professionals increasingly aremeasuring their effectiveness by the longer-termperformance of the candidates that they bring intotheir organizations.

“There’s an evolution here. It’s not just about thenumber of people the talent acquisition personrecruits, but it’s about the retention of hires. And, inthe more sophisticated organizations, the performanceof new hires after a period of time is a key metric,” saidRichard Shea, managing director, Korn FerryProfessional Search, EMEA.

With unemployment at low levels, retention of newhires is becoming more difficult. Ninety percent ofexecutives say that retention of new hires is an issue intheir organization, in a survey conducted by KornFerry. The majority of respondents reported thatbetween 10% to 25% of new hires at their companiesleave within the first 6 months. This is an issue becauseturnover is costly and disruptive. The cost of replacinga manager within 6-12 months of their hire is 2.3 timesthe person’s annual salary, according to Korn FerryAdvisory research. For a senior executive position, thereplacement cost could amount to $1 million or more.

In some organizations, members of the talentacquisition team receive bonuses based on theperformance of candidates they brought into theorganization—particularly for sales positions and otherjobs where performance can be easily quantified.While this is not a common practice, it very likely maybecome more popular as organizations seek toincentivize the recruitment of high performers.

The sophistication level of the talent acquisitionfunction varies globally and within various sectors,Korn Ferry Advisory talent experts note. Generally,Asian organizations are more transactional than NorthAmerica and Europe. Within sectors, finance andtechnology organizations tend to be more strategic intheir recruitment than organizations in themanufacturing or retail sector.

With many positions difficult to fill and with gaps inthe leadership pipeline, it’s not surprising that time-to-hire and retention were rated as the two mostimportant metrics that talent acquisition professionalsuse to measure their performance. Getting candidateshired quickly and who also remain with theorganization for several years is a key factor in drivingorganizational performance. And given the complexityof the economic environment and the changing natureof work, time-to-hire and retention are likely tobecome even more important in the years to come.

What are the top three most important metrics thatyou measure today?

Time-to-hire.

Retention.

Performance after 6, 12, 18 months.

Cost per hire.

Hiring manager satisfaction.

Diversity of candidates.

Source of hire.

Offer to acceptance ratio.

Interview to offer ratio.

Other

Key findings.

While time-to-hire is the toppriority metric talent acquisitionprofessionals use in evaluatingtheir performance, it is closelyfollowed by the longer termconsiderations of retention andperformance over 6, 12, and 18months.Quality of hire and competitionfor talent are the two mostsignificant issues that keeptalent acquisition professionalsup at night.Talent acquisition professionalsreport that the lack ofcandidates capable of movingup the leadership pipeline is thenumber one factor in theshortage of talent and thisresonates across all regions.

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Although diversity of candidates ranked outside thetop five metrics overall, in some sectors, such astechnology and financial services, diversity ofcandidates by gender, race, and age has become moreimportant. Increasingly, these organizations viewdiversity as a core value and as a stimulant toorganizational creativity. Companies with people fromdiverse backgrounds can generate significant businessadvantages, including enhanced creativity, greatersophistication globally, and an ability to identify betterwith diverse customers.

Cost per hire ranked as the fourth most importantmetric, which is consistent with talent acquisitionprofessionals focusing more on the long-term metricsof retention and performance, and moving away froma transactional to a more value-added approach.

Quality and competition.

The two top concerns of talent acquisitionprofessionals are the quality of their hires and thecompetition for talent.

Non-stop advances in technology and rapidlychanging business strategies have led to the creationof jobs that didn’t even exist a few years ago, as wellas demands for new skill sets in existing jobs andprofessions. In addition, steady economic growth inmost developed nations and rapid growth indeveloping nations has fueled job growth, contributingfurther to an ever-tighter market for talented peopleparticularly in various areas of technology.

“This is a dramatic example, but I think it exemplifiesthe issues many organizations face. I work with acompany that was in the automotive parts business,but has divested itself of all parts of that business tofocus exclusively on driverless car technology. Theirexisting employees do not fit with the new strategy.They don’t have an employer brand at all in technologyand they have to compete with the likes of Google fortalent. It’s quite a challenge,” said George Vollmer, vicepresident, global accounts & strategic development,Korn Ferry RPO.

Heightening the competition for talent are online toolswhich make it very easy to identify talent from aroundthe world for specific positions. A talent acquisitionprofessional can simply type a job title and a companyand immediately find the names, professionalbackgrounds, and contact information of potentialcandidates. With everybody having access to the sameinformation, recruiters must find new ways to competefor talent.

One approach is to adopt more sophisticated planningand execution software tools to assist in theacquisition process. However, as noted in Part 2 ofKorn Ferry Institute’s Talent Forecast series, less than50% of talent acquisition professionals are takingadvantage of applicant tracking systems, videointerviewing, or online assessment tools.

Another strategy is to seek candidates from differentindustries and backgrounds who possess the corecompetencies required of the positions to be filled.

“Going to competitors isn’t enough anymore.Recruiters need to better understand how skills,knowledge, competencies and behaviors can beleveraged from one industry to another and from onetype of job to a very different type of job. For example,I was recently involved in placing someone from aconsumer background into a position of director ofprocurement for a healthcare organization. Thecandidate’s skills were easily adaptable acrossindustries,” said Gustavo Parise, managing director,South America, Korn Ferry RPO and ProfessionalSearch.

“It’s a question of what are the transferable skill setsand knowledge bases. I’m seeing retail banking firmsand life sciences companies bring in people withconsumer industry backgrounds,” said Shea.

Rank in order of importancethe talent acquisition issuesthat keep you up at night

30% Competition for talent30% Quality of hire14% Aligment with the businessstrategy8% Capability and capacity ofrecruitment teams6% Recruitment tools andtechnology4% Diversity3% Lack of reporting, visibility,transparency of recruitmentfunction3% Recruitment costs2% Flexibility and scalability ofrecruitment team

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As more talent acquisition professionals embrace technological tools to help them innovate and become morestrategic, they will become more adept at recognizing key skill sets outside of traditional talent pools and recruitingcandidates that will provide unique and valuable contributions to their organizations.

Talent acquisition professionals also need to become effective advocates of their organization’s employer brandand must work with colleagues to ensure the brand is disseminated effectively to targeted talent pools via socialmedia and other avenues.

Developing ready-now leaders.

Talent acquisition leaders report that the No. 1 reason they are experiencing a shortfall in talent is a lack ofcandidates with the skills to become more important leaders within the company in the future. While theseverity of the issue varies among regions, organizations and industries, it's clear throughout the business worldthat most organizations are not producing leaders at a fast enough pace to execute their strategies.

The causes of the leadership gaps are many.

Underdeveloped leadership development programs.

Demand for skill sets that are not part of the organization's existing knowledge base—often occasioned by anew strategic direction (for example: legacy industries lacking digital talent).

Demographic trends that have severely weakened pipelines in certain regions and industries.

In Latin America, for example, rapid economic growth during the last 15 years led many companies to promoteyoung talented people too quickly. “Today we have executives in leadership without the experience to face difficultmoments and are not in a position to move to the next level in their organizations,” said Parise.

A similar situation exists in Asia, reported Pip Eastman, managing director, ASEAN, Korn Ferry RPO. “Talent in Asia,particularly greater China and India today, expect rapid career progression and development in the sea ofopportunities. However, this fast career progression can lead to a deficit in leadership capability.”

find new ways

With employment data widely available online, talent acquisition professionals need to...

to identify and compete for top talent other than simply finding people in targeted positions.

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Tackling the leadership pipeline shortage requires thatorganizations do a more effective job of leadershipassessments, development, and succession planningfor specific positions. For example, as part of theirresponsibilities, organizational executives shouldconsider holding managers and senior leadersresponsible for developing their own successors.

For their part, talent acquisition professionals shouldexamine more closely the competencies, experiences,traits, and drivers of candidates to get a better insightinto their leadership potential and developmentalneeds.

“Recruiters can recruit for a specific role, like achemical engineer. But can they determine if thisengineering candidate can become a plant manager in5 years? Probably not. They should use state-of-the-art assessments to identify the traits andcharacteristics of success. And once they’ve identifiedthose people, they must have a plan to get them ontoa developmental track,” said Vollmer.

In short, talent acquisition professionals need to take astrategic view and think of talent as a business assetthat should be developed in a systematic manner toprovide a foundation for superior organizationalperformance.

A previous Korn Ferry global survey of seniorexecutives revealed that organizations are dissatisfiedwith their leadership development programs. Morethan half of the senior executives ranked the return oninvestment for their leadership development programsas "fair," "poor," or "very poor." If they were to startover, business leaders said they would maintain only52% of their current approach to development.

In traditional leadership development programs,participants typically attend classes or seminars tolearn about leadership skills. In most cases, theprograms are disconnected from the issues inside theorganization and include little follow-up work. A moreeffective approach is to conceive development as acareer-long journey with multiple events andtouchpoints that is directly connected to theorganization's issues and strategies.

“Better development of existing employees is key. Ithink it starts with assessments and identifying peoplewith high potential. Then the people identified as highpotentials need to be aligned with the businessstrategy and given the proper training and experiencesto move them to next level,” said Shea.

How talent acquisition can contribute.

The world of talent acquisition is changing. Asdescribed in Part 1 of The Talent Forecast, themajority of candidates are less motivated bycompensation and more motivated by organizationalculture. Many workers have joined the contingentworkforce where they perform as independentcontractors for a variety of organizations. And withunrelenting pace of technological and businesschange creating demand for new skills, the war fortalent has become more intense.

Little wonder, as Part 1 of The Talent Forecast reporthighlighted, that talent acquisition professionals saythat it’s harder to find candidates today than it was 12months ago.

What is the main reason youare seeing talent shortages?

30% Lack of candidates thathave the skills to move up theleadership pipeline21% Sophistication of skillsrequired for our sector/nicheroles21% Competition from othersectors for the same talent8% Qualified candidates are notaccepting offers6% Brand awareness6% Evolving of generationalmind set (need to adapt todifferent generations in theworkplace)5% Globalization (candidateswon't move to where the rolesare needed)3% Lack of diverse candidates(e.g. gender, race, sexualorientation, veteran, disability)

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To succeed in this changing environment and to deliver greater value to their organizations, talent acquisitionprofessionals should consider the following:

Develop an in-depth understanding of the business strategy and how it impacts talent needs throughout theorganization.

Endeavor to build better partnerships with hiring managers and senior leaders by providing qualityinformation on the talent marketplace, candidate pools, and competitors. Establish an ongoing dialogue withthese leaders to better anticipate and prepare for long-term talent needs.

Utilize talent acquisition software tools to improve the recruitment and hiring process and to provide data torecord talent acquisition performance and success.

Tap into a wider network of candidates. Focus on cross-over skills from other industries that would bringvalue to the organization.

Examine performance of successful hired candidates to assist in assessing new candidates underconsideration.

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| The talent forecast - Part 3 |

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Conclusion

Most organizations have significant talent gaps at alllevels of their leadership pipeline. Withoutconfronting this issue head on, organizations willhave difficulty achieving their strategic objectivesand maximizing performance.

Talent acquisition needs to be part of the talent gapsolution. Organizations can no longer afford to viewtalent acquisition largely as a service function. Seniorleaders need to partner with recruiters to target talentpools and address talent needs from a long-termstrategic perspective. For their part, talentprofessionals should utilize technology and tools toprovide information and analytics to bring a higherlevel of performance and professionalism to the talentacquisition process.

Organizations can encourage more effectivepartnerships between talent acquisition professionalsand senior leaders by connecting the performance

metrics of recruiters to the performance of thecandidates they hire, by requiring talent acquisitionprofessionals to develop strategic talent acquisitionplans, and by stipulating that recruiters utilizetechnology to better source candidates, providemarket information to hiring managers, and track theirown performance.

The good news is talent acquisition professionals areon the right track—at least in part. Increasingly, theyare focusing on the long-term metrics of retention andcandidate performance. On the other hand, they coulddo a better job of adopting technological tools toincrease their effectiveness and to provide more usefuldata to hiring managers and senior leaders.

Organizations that raise the performance bar for thetalent acquisition function will be positioned to acquirethe best talent, address their leadership pipeline gaps,and outperform their competitors in the years tocome.

To drive a higher level of performance, talent acquisition professionals should utilize…

Technology

Tools

Analytics

technology and tools that generate information and analytics around thetalent acquisition process.

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8 © Korn Ferry 2018. All Rights Reserved.

About Korn Ferry

Korn Ferry is a global organizationalconsulting firm. We help clients synchronizestrategy and talent to drive superiorperformance. We work with organizations todesign their structures, roles, andresponsibilities. We help them hire the rightpeople to bring their strategy to life. And weadvise them on how to reward, develop, andmotivate their people.

Contributors Methodology

From mid-August until the end of September 2016,Korn Ferry ran an online survey to uncover the issuesand trends influencing the talent acquisition leaderrole. The survey was designed for talent acquisitionand human resources leaders across all geographies(NA, APAC, EMEA and LATAM) and conducted in themost appropriate language for each market. More than1100 respondents spanning VP/SVP/EVP, C-suite,director, manager and individual contributor levelscompleted the survey. Six major markets: technology,industrial, life sciences and pharmaceutical, financial,professional services and consumer were represented.

References

Korn Ferry Institute, 2016, Real World Leadership:Building a pipeline of ready-now leaders.

Korn Ferry Institute, 2016, What color is your passport?

Korn Ferry Institute, 2016, The inclusive leader.

Korn Ferry Institute, 2016, The trillion-dollar difference.

Korn Ferry Institute, 2017, The Talent Forecast, Part 1:Adapting today’s candidate priorities for tomorrow’sorganizational success.

Korn Ferry Institute, 2017, The Talent Forecast, Part 2:Improving talent acquisition through alignment,strategy, technology, and partnerships.

Byrne MulrooneyCEO, Korn Ferry RPO,Professional Search &Products

Pip EastmanManaging Director, ASEAN,Korn Ferry RPO

Gustavo PariseManaging Director, SouthAmerica, Korn Ferry RPOand Professional Search

Richard SheaManaging Director, KornFerry Professional Search,EMEA

George VollmerVice President GlobalAccounts & StrategicDevelopment, Korn FerryRPO