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  Damned If She Does, Damned If She Doesn’t: rethinking the rules of the game that keep women from succeeding in business

By Lynn Cronin & Howard Fine, 272 pages, Prometheus Books, 2010. ISBN 978-1-61614-174-5
 
 
 
  Retooling HR: using proven business tools to make better decisions about talent

By John W. Boudreau, 200 pages, Harvard Business Press, 2010. ISBN 978-1-4221-3007-0
 
 
 
  Workforce of One: revolutionizing talent management through customization

By Susan M. Cantrell and David Smith, 260 pages, Harvard Business Press, 2010. ISBN (not available)
 
 
 
  Training on Trial: how workplace learning must reinvent itself to remain relevant

By Jim D. Kirkpatrick, Ph.D. and Wendy Kayser Kirkpatrick, 240 pages, AMACOM Books, 2010. ISBN 13: 978-0-8144-1464-4
 
 
 
  One Page Talent Management: eliminating complexity, adding value

By Marc Effron and Miriam Ort, 176 pages, Harvard Business Press, 2010. ISBN (not available)
 
 
 
  What’s Next GenX? Keeping Up, Moving Ahead, and Getting the Career You Want

By Tamara Erickson, 244 pages, Harvard Business Press, 2010. ISBN 978-1-4221-2064-4
 
     

  Workforce Solutions Review Online  
 
 
   
  The Business Impact of Talent on the Bottom Line  
  By David Turetsky, Workscape  
 


Regardless of an organization’s size, talent has a cost. The cost goes well beyond salary and benefits. As evidenced by sourcing, recruiting and hiring costs, a tremendous amount of time and money goes into hiring the right person. Then, to ensure short- and long-term success, further investments are made in onboarding, total rewards and training. Multiply these costs by many and it’s easy to see why when a company decides to hire people, what they’re really doing is making a substantial investment in the future of the company. And, if we’re really looking at how this investment will impact the bottom line, it’s one person at a time. That’s why each hire needs to have a positive revenue impact that is at least cost-neutral or adds value.

In fields such as professional sports or entertainment, this concept isn’t foreign.  One great baseball player can have a direct impact on revenue; one great movie star can carry a film. Yet, despite the growing interest in talent management, companies struggle to organize in a manner that enables them to fully analyze the impact of talent on the bottom line. Since talent can readily translate into profit, as well as increased customer satisfaction and strengthened brand equity, here are four areas to consider when aligning talent management efforts with business objectives:

  1. New employees can’t help but be expensive. Even with social media now making candidate sourcing easier and less costly than traditional paid job boards, other costs such as hiring managers’ time, provisioning and training must be factored. There needs to be a readily apparent value to new hires that will enable them to “pay for themselves” over time or be accretive to the bottom line.

  1. Determining what constitutes the right talent and how that talent will integrate into the company culture is crucial. Identify traits of the organization’s top performers and determine what characteristics they have in common. Before posting the job opening to a job board or calling a headhunter, consider finding the right hire through the people who have the most to gain by a new hire: your current employees. Go to the people who already love what they do and where they do it and ask them for assistance in filling open positions or building a candidate pipeline. Employee referrals tend to be of higher quality, and as a result, are a rich source of right-fit job candidates.

  1. Got talent? Develop them! Productivity improves when you keep your current talent enriched and engaged. They want to know if they can build a future where they are and the best way for a company to ensure talent stays is to help them develop new skills through new assignments and challenges, while keeping them excited and enthusiastic about what they’re doing.

  1. Be realistic about the limits of talent. There’s a time when the only decision is the one that leads to separation – know when it’s time to let someone go. Good leaders know when change is inevitable. For example, at Microsoft, while Bill Gates guided its start-up phase, he knew when it was time to do a hand-off to Steve Ballmer and step aside. A resource that is unproductive can damage employee morale and cost a company far more than finding the person who should be in the role. It’s incumbent upon management to determine who the right resources should be by asking “does this person add value or is he or she a drain?” If it’s the latter, take action and purge unproductive talent. 

Even if HR is already doing these four things, there are many other considerations that are overlooked or underutilized. For example, to further align talent management with a positive impact on the bottom line, organizations should conduct proactive workforce planning. Not workforce planning on spreadsheets in the confines of the four walls of the company; true workforce planning is a scientific approach to optimizing talent. Much the way employee performance management shouldn’t be relegated to a once a year event, neither should workforce planning. It should be baked into the DNA of any organization that is serious about the relationship of its biggest line item – labor – and how that investment creates positive business outcomes.

The recent recession was a painful, albeit good, exercise in what should have been taking place in organizations regardless of economic conditions. Since the right mix of metrics and benchmarks simply didn’t exist for most companies, the response to the downturn in the economy was in the form of workforce reductions. While reducing head count was inevitable for many organizations, how the task is performed has critical implications on a company’s future. Many of these decisions were monetary; they were based on cutting salaries instead of evaluating impact in the context of lost productivity gains, competitive advantages, flight risk and engagement. As economic conditions continually improve, savvy organizations that are seeking to avert a repeat performance are now turning to predictive modeling – which includes the use of data outside the HR department, as well as their own companies, e.g., macroeconomic data – to improve business results.


 
 

Examples of Macroeconomic Data

The Conference Board Consumer Confidence Index®, which had decreased in February 2010, rebounded in March. The Index now stands at 52.5 (1985=100), up from 46.4 in February.

The Conference Board also determined that labor demand was essentially unchanged (-29,600) in March 2010. Demand for health care practitioners and technical positions rose in March, while demand for office and administrative support jobs dipped.

The Conference Board Measure of CEO Confidence™, which had increased in the fourth quarter of 2009, decreased slightly in the first quarter of 2010. The Measure declined to 62, down from 64 last quarter.

 
 


Macroeconomic data – housing, GDP, jobs reports – can bring insightful perspective on marketplace trends; however, most talent decisions need to first start on a micro-level in order to support a holistic approach to workforce planning. Companies cannot possibly know who is not paying for themselves if they don’t have the processes in place with which to gain that information. When employee performance is an annual process, there is little to no way to ascertain which employees are consistently meeting or exceeding goals.

Given dynamic economic conditions, as well as the increased need to report financial activity transparently and frequently, turning employee performance management from an annual event to a monthly – if not daily – objective keeps management more closely aligned with its talent pool. When combined with macroeconomic trends, the resulting data from this frequency can give HR the information it needs to develop meaningful benchmarks and programs. Armed with a blend of these tactics and tools, HR can help lead the way to ensure talent investments positively impact the bottom line.


 

David Turetsky, director of Talent Management Strategy at Workscape, has more than 20 years of experience as an analyst, manager, executive, consultant and entrepreneur focused on best HR practices to drive organizational change. His experience includes a wide variety of technology-related projects for the management of compensation and HR programs, including job evaluation programs, broad-based employee incentive plans, statistical evaluation of pay programs and a wide range of related human resources issues. He can be reached at David.turetsky@workscape.com.

 
 
 
 
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