Here’s an interesting article in a recent Wall Street Journal article: “They Ponder Layoffs, But Executives Still Face Gaps in Talent” (subscription may be required). Companies are finding themselves without critical talent, are now trying to hire, yet have frustrated employees that have not been given any career planning or development.

For the amount of time that it takes to identify key positions, fill out job requisitions, search, interview, etc, it seems like a program on internal talent development can be initiated for those same key job roles. Not only would companies have a succession planning process started, but the focus on development and career planning should increase employee engagement. And haven’t we seen where that affects customer satisfaction? We’ve seen that even with our own internal talent management programs.

I like the approach of Robert Mellwig, vice president of human resources at Destination Hotels: “Our approach in the world of hospitality is to have an exerted, directed effort to grow your own from within. We’re trying to prepare individuals for future stretch assignments within the organization under a broader concept of talent management, and succession planning is a really critical piece of that.”

Learning and talent management first moved from the realm of a support function to a mission critical application when we all figured out how to apply the technologies to everyday business problems. To make these applications even more “mission-critical” and to derive the greatest benefit, we have to figure out how to make these processes and technologies truly part of “everyday” activity. The networking dynamics in the “Web 2.0” world offer one great way to move in this direction.

To read an article on performance management and Web 2.0, click here
Excerpts about the article

“…All of this is a paradigm shift. Traditional talent management is controlled for the employee. When a worker undergoes a traditional performance review, he or she gets feedback. A rating of some kind is typically assigned, and instructions for development are delivered. In most cases, performance appraisals are rigid and conducted in a sort of broadcast method. Very little, if any, of the experience is self-directed.

Joining Web 2.0 tools to traditional performance management practices such as the annual review, 360-degree assessments and training, etc. gives employees a sense of independence. They can evaluate their competencies and take actions to improve productivity in a networked way, with peers, managers and colleagues providing support. In this way, Web 2.0 tools and traditional talent management technology mesh, and workers can seek out organizational experts and communities of practice as needed.

Talent executives easily can make a mistake attempting to integrate Web 2.0 and talent management. Integration can be a misnomer. A better way to think about the relationship between Web 2.0 tools and talent management is to ask how your organization can tap Web 2.0 to enhance employee performance…”

To read an article on performance management and Web 2.0, click here

Employee engagement is important, and yet another survey links employee satisfaction to the bottom line. This is a new research report from Wharton.

How Investing in Intangibles — Like Employee Satisfaction — Translates into Financial Returns

Contrary to management theories developed in the Industrial Age, employee satisfaction is an important ingredient for financial success, according to a new research paper by Wharton finance professor Alex Edmans. …he examines the stock returns of companies with high employee satisfaction and compares them to various benchmarks … His research indicates that firms cited as good places to work earn returns that are more than double those of the overall market.

Companies on Fortune magazine’s annual list of the “100 Best Companies to Work for in America” between 1998 and 2005 returned 14% per year, compared to 6% a year for the overall market, according to Edmans.
Sounds good to me!

Recently reported by the Chartered Management Institute (http://www.managers.org.uk) with regards to goal setting and competencies:
“Senior executives struggle to juggle as priorities compete for attention. Prioritising a major challenge for UK managers.”

Senior executives across the UK admit they are struggling to manage conflicting priorities, as demand for their attention is split between strategic planning, stakeholder management and personal needs.  Research, published today by the Chartered Management Institute, reveals that the UK’s managers and leaders are highly motivated, but worry that the challenges they face will affect their ability to perform.

The research, of 1,175 managers and directors, shows that an overwhelming majority (84 per cent) grapple with the challenge of ‘prioritising work’.  Two-thirds (63 per cent) claim to have ‘little time to think’ and 53 per cent also say they struggle to find ‘time for strategic planning’.  Only 5 in 10 find it easy to make time for their staff, while a similar proportion (44 per cent) are diverted by internal politics.”

After more statistics, the article says:

The research also shows managers are worried that such narrow approaches will affect performance.  However the survey shows that the UK’s managers are determined to succeed.  83 per cent can’t wait to ‘get up in the morning’ and 75 per cent claim they find it easy to ‘keep positive’.  There is also a clear indication of camaraderie, with 76 per cent turning to colleagues for support.

Jo Causon, director of marketing and corporate affairs for the Chartered Management Institute, says:  “In the current climate, prioritising a multitude of responsibilities and tasks at work is a real challenge for managers.  Organisations need to provide a supportive and open environment so individuals can dedicate time to developing fresh ideas for the future of the business.  The lack of professional training and development is also a concern.  If UK employers fail to invest in the skills and competencies of individuals, there will be a serious impact on how well the UK performs on a global market in the future.”

* Taken from the National Management Salary Survey 2007, published in June 2007 by the Chartered Management Institute and Remuneration Economics

China’s labor market is one of the most challenging in the world, and many companies list human resources as their top operating issue in China, largely because of rising labor costs and high turnover rates.

Two trends drive the consistently large salary increases and high turnover rates. First, foreign companies continue to invest heavily in China, and demand for talent remains high. Second, as first-tier Chinese companies transform their businesses to compete on the global stage, their expectations for talent are beginning to match those of foreign companies. The result is a persistently tight labor market for first-tier multinational and domestic companies operating in China.

Why do employees leave? #1 is compensation. Next is better career opportunity and tied for third is better benefits and better training and personal development opportunities.

More on China

http://www.talentmgt.com/performance_management/133/index.php

http://www.corpu.com/reports/chinaworkplace.asp

According to the Hackett Group, by excelling in talent management, the average Fortune 500 company can generate a nearly 15% improvement in Earnings Before Interest, Depreciation, and Amortization (EBITDA), netting almost $400 million annually.

Hackett’s research found a strong correlation between improved financial performance and top-quartile performance in four key talent management areas: strategic workforce planning, which involves identifying the skills critical to a company’s operation and how those needs match up against those of the existing workforce; staffing services, including recruitment, staffing, and exit management; workforce development services, such as training and career planning; and overall organizational effectiveness, including labor and employee relations, performance management, and organizational design and measurement.

Companies with top-quartile talent management outperformed typical companies across four standard financial metrics. They generated EBITDA of 16.2%, versus 14.1% for typical companies. This gap netted a typical Fortune 500 company (based on $19 billion revenue) an additional $399 million annually in improved EBITDA. On average, top talent management performers also generated $247 million annually via a 22% improvement in net profit margin, $992 million annually through a 49% improvement in return on assets, and $340 million annually via 27% improvement in return on equity.

Hackett’s research also found that top performers in talent management operate very differently than their peers. They spend 6% less on HR overall than typical companies, driven by dramatically lower costs in key areas such as total rewards administration, payroll, and data management and also lower employee lifecycle costs. These savings enable them to invest more in talent management processes. Top performers in talent management are also 57% more likely than their peers to have a formal HR strategic plan in place, more than twice as likely to facilitate strategic workforce planning discussions with senior management, and 50% more likely to link their learning and development strategy to their company’s strategic plan.

Now, that sounds like a business plan!

From KnowledgeInfusion: According to the most recent CFO Business Outlook Survey, for the first time in years, labor costs topped the list of biggest concerns. Three out of the four top worries are HR issues.

What Worries You as a CFO?

Cost of Labor – 46%
Cost of Healthcare – 39%
Consumer Demand – 34%
Skilled-labor Shortage – 33%

How can HR help? Focus on optimization of talent, get more value out of what you already own, understand the skills/competencies of your workforce, focus on compensation strategies…

I have been working my way through Josh Bersin’s “High Impact Talent Management” research and pulled out a few things. First, this is not his report on vendors. It’s a survey of what companies are currently thinking. Here’s a few interesting pieces of information:

Average business impact of doing this process with excellence. Priority of impact to the business:

1. Performance management
2. Competency management
3. Sourcing and recruiting
4. Leadership development
5. Learning and development

One interesting point is that that performance management is “management itself” – the daily management of people.

Josh was stressing that organizations must have the processes first. The technology must support the processes. Organizations will see a 5-10 times higher ROI by focusing on the processes themselves; not the systems. Systems are enablers.

Performance management has the highest impact on business results. If it’s enterprise wide, it can drive 40% higher business impact than just having a few standards in place. Also, if enterprise wide, it also positively impacts Leadership development, career planning and pay for performance (and others). Why? It creates a common currency for the alignment and evaluation of people, it creates a culture of performance and it creates a dialogue and process for development.

No ROI for vendor Performance Management Systems

Bersin found that performance management systems are not yet showing return. Organizations haven’t had them long enough and the impact of PM is driven by process, behavior and culture. Performance management as a system must work before you automate it.