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.”

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

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…