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How to beat the talent shortage and improve your profits

(C) Copyright 2011, Pearl Talent Management www.PearlTalentManagement.com

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How to beat the talent shortage and improve your profits by Sara Lord, Dec 2010



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Contents: Title Page

No Introduction

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Why is there a talent shortage?

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So why should you care in terms of your own organization?

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What’s the benefit of talent management?

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What is talent management?

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Is talent management still a priority in an uncertain economy?

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What happens if I ignore it?

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How does talent management work?

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Benchmark your organization

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How to devise a talent management strategy that will beat the talent shortage

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How to use your talent strategy in a buoyant economy

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What “best practice” leadership development and executive coaching supports effective talent management?

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In summary…..

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Next steps

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Introduction Your number one leadership priority right now and going forward should be talent management!

I’d like to present a very compelling business case for organisations to make talent management their number one leadership priority if they are to survive the growing talent shortage. This should be your CEO’s number one challenge going forward. Boston Consulting Group and PWC (2009) Why is there a talent shortage? We live in a world where developing countries have a declining birth and death rate, for which the implications on organisations are enormous. This concept is more commonly known as the “demographic time bomb”. This means that, as baby boomers are retiring, we do not have enough younger people to replace them in the workplace and are therefore losing the opportunity to transfer a wealth of knowledge from one generation to another. Who is going to replace them? McKinsey first coined the phrase “the war for talent” in 1997 when there was a realization that organisations would all compete for the best talent.



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So why should you care in terms of your own organization? Australia is currently experiencing an uncertain economy. Some would argue we are heavily influenced by the global financial crisis and others would say Australia is experiencing a boom economy due to the thriving mining and resources industry. What’s interesting to note is that, whatever your opinion, when it comes to recruiting talented employees most organisations are frustrated at the lack of available talent in Australia. The alternatives are to recruit from abroad, but this can be high risk and expensive. What’s the benefit of talent management?

It’s very simple: companies with excellent talent management systems have higher profits than their competitors! 2006 DDI Leadership Forecast Companies with the best talent management systems have ten-fold higher shareholder value than those companies who have poor or no talent management system (War for talent 2000) According to Bersin & Associates (July 2009), the return on investment for having a good talent management strategy is:



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40% lower turnover for high performers

26% higher revenue per employee

1.5 times more likely to develop great leaders

94% more likely to have the right people in the right jobs

The bigger question is, why wouldn’t you use talent management? What is talent management? Talent drives performance via

• Right people • Right jobs • Right time

= Why is it that in many other walks of life, so much trouble is taken to identify and nurture talent, such as the music, sports and TV and film industries? Why do we make do in corporate world when so much is at stake financially? Nowadays, organisations spend on average around 70% of their budget on employees. Therefore it makes sense to ensure there is a mechanism put in place to ensure a return on investment. Many people misuse the phrase talent management. It often refers to recruitment but it is so much more than this. In fact, talent management refers to the whole end-to-end process of



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how we recruit, develop, retain and succession plan people by the most efficient means possible so that we have a strong leadership pipeline. Talent management done well will transform your organisation. It is being recognised as the way forward, so why not embrace it now rather than get left behind? Is talent management still a priority in an uncertain economy?

In a talent shortage, the key focus is to retain and nurture your best employees so that you minimise the need for recruiting. According to recent engagement research by Hudson, the main reason why your best talent will stay or jump ship is the extent to which they feel supported by their line managers and whether they are offered meaningful career development. The worrying aspect for Australia is that employees are not that engaged and the ones most likely to jump ship will be your best talent. Ironically the least engaged employees are in WA, where potentially the best job prospects are located. Clearly one can assume that the quality of line managers and career development in Australia is not good enough.



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With good talent practices, your organisation can provide effective leadership and career development so that your employees (in particular you most talented employees) will be more productive and will want to stay with your organisation. This becomes even more important as Generation Y are moving into the workplace, it is clear they want meaningful work and are less loyal than their predecessors, Generation X and the Baby Boomers. We assume all’s well for Australia and we are weathering the storm of the global financial crisis, particularly in the WA mining and resources industry. Whatever the state of the economy may be, your highest talent management priorities, at all times are to hold onto the employees you already have:

retention: boost morale and retain talent in the most critical roles

build a talent leadership pipeline: so that you are ready for tougher times and to drive performance now

If you have to recruit, consider the following priorities:

work-force planning: in preparation for an up-turn or down-turn be first off the block. Keep a talent pool not a talent puddle or it will come back to haunt you.

a great recruitment strategy to fill your talent gaps: - ensure your interviewers are fully trained to use competency-based interview questions - don’t just rely on interviewing. Consider other options, such as ability tests, to increase your chances of success - have a great employee value proposition and give candidates/new hires a great employee experience - always hire for future potential, to nurture your talent pipeline.



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It’s not just about “hitting the ground running.”

Exit poor performers and don’t carry casualties.

What happens if I ignore it? You’ve survived this long without talent management, so why do you need to do anything?

Failing to make the most of your organisation‘s talent can have terrible ramifications on your organisation’s success, particularly if all of your competitors are getting on board already. The results of not doing anything about talent management going forward could mean that:

engagement levels drop (productivity declines and talented employees leave)

opportunities for business growth are missed due to lack of talent in the business

your competition overtakes you Do something about talent management sooner rather than later as, like cancer, if you catch it early there is possibly a cure, but if you leave it too late it might be incurable.



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If the rate of change inside your organisation is less than the rate of change outside – your end is in sight! (Jack Welch former CEO of General Electric)

How does talent management work? THE TALENT MANAGEMENT CYCLE

1.) Attract talent:

ensure you have high quality interview skills training

use complimentary selection methods: such as psychometrics

provide a great employer branding and employee experience

hire people for future potential to nurture your talent pipeline

aim to recruit internally first, every time

use hiring data for future employee development purposes



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2.) Grow talent:

Develop talent: put in place high quality leadership development courses as well as mentoring and coaching

Performance management: ensure you have an effective process to drive performance and measure progress. For poor performers, manage up or out of the business.

3.) Build talent: Build a talent leadership pipeline, which comprises a talent pool and robust succession planning (for up-skilling and internal mobility). The key issues of the leadership pipeline are:

right people: know your talent pool (use a talent matrix)

right skills: keep a skills database on your talent pool

right jobs: don’t under-utilise talent – put them in the right jobs

workforce planning: align to strategy and job evaluation

4.) Retain talent: Your turnover of high potential employees will be five times lower if you carry out the following:

Move high potential employees into fast-track development

Research your internal employee value proposition (what makes high potentials stay?)

ensure you have your talent in key critical roles

reward talent for strategic contribution 5.) Evaluate talent: Measure and analyse metrics to assess progress/effectiveness of your talent strategy. For example, you would expect engagement levels to increase as evidence of success.



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Benchmark your organization Where would you place your organization now and where would you like it to be in future?

How to devise a talent management strategy that will beat the talent shortage To beat the talent shortage, your talent strategy and business strategy must go hand in hand!



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SET YOUR DESTINATION FIRST: based on business strategy, build your talent vision. ANALYSE YOUR START POINT: Know your current talent strengths, weaknesses, opportunities and threats BRIDGE THE GAP – build a roadmap: Know your talent and fill the talent gap. What are your most critical jobs, where will the talent come from? SET FIRST TALENT GOAL: What is the priority/the point of pain? ONE STEP AT A TIME: Don’t try to build Rome in a day!! It takes time to have a successful fully integrated talent system. How to use your talent strategy in a buoyant economy Become a talent acquisition and retention organization. The four pillars of your talent acquisition and retention strategy should be:

foundation (get your leadership buy-in to support that talent management matters)

attraction (your employee value proposition)

selection (what is your workforce planning and recruitment strategy?)

retention Why do “A” players say yes? Why do they stay? Work this out or risk losing your best people. Generally people want: - a chance to make a real impact - real, clearly understood challenges - personal meaning in their work - a supportive culture with continuous learning - appreciation, coupled with appropriate rewards - growth opportunities - meaningful leadership development



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What “best practice” leadership development and executive coaching techniques support effective talent management now? Leadership development courses: Provide best practice leadership development courses to high performing high potential employees, who would benefit from one or more of the following:

interview skills

build a coaching culture and coach individuals effectively

lead and inspire your team

maximize engagement, drive performance and reduce employee turnover

Executive coaching: Provide executive coaching to high performing high potential employees who would benefit from one or more of the following:

strengthen your leadership capabilities

improve your work relationships

improve/change specific behaviours

drive performance

change leadership: how to become an agile leader

career transition: how to step up to the next career level



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In summary….. To deliver the best business results, make talent management your number one leadership priority in order to benefit from:

• higher profits • lower turnover for higher performers • higher revenue per employee • stronger leadership

People are not your greatest assets. The right people are your greatest assets. (Jim Collins)

How can Pearl Talent Management help you? Don’t hesitate to contact Pearl Talent Management should you wish to discuss your talent management, leadership development and executive coaching needs in more detail. I would be happy to help you take your first steps towards building your organisation’s talent strategy.

Transform your leadership + fulfill your potential = maximise your profits

Contact Info Sara Lord, MSc Managing Director Pearl Talent Management Pty Ltd Perth WA Australia [email protected] + 61 (0)410 519805 www.PearlTalentManagement.com