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Talent Management Strategy

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Many businesses now believe that their people and the management of their talents are their most significant competitive advantage. There
have been many improvements in talent management practices over the last few years.  E-recruiting has improved the speed, efficiency
and effectiveness of building candidate pools.  Candidate tracking systems have automated many tedious tasks allowing recruiters to spend
more time assessing, interviewing and building relationships with candidates.  The quality of information available on candidates has greatly
improved leading to better hiring decisions.  New recruitment and assessment technologies have improved the employer’s ability to evaluate
a candidate’s fit with both the organization and the position.   

The competitive advantage of having a talent management strategy is more clearly understood by business managers today.  Employers
have increased their efforts to become an employer of choice, so that they can acquire the best talent available in the marketplace.  Yet, many
organizations today do not monitor and evaluate critical talent management processes and outcomes.  A study by Watson Wyatt, for which
more than 750 publicly traded companies were surveyed, showed that the organizations that had very effective human capital management
practices produced a five-year total return to shareholders that was more than three times that of organizations with poor human capital
management practices.   

How Can We Evaluate Human Capital Management Effectiveness?

There are five processes and outcomes that organizations can monitor to evaluate the effectiveness of their talent management practices.  

Five Processes

• Talent Sourcing Alternatives

• Recruitment Efficiency

• Selection Assessment Validity             

• Individual Development Planning          

• Human Capital Strategy                                  

Five Outcomes

• Selection Ratio

• Time to fill

• Job Performance

• Retention

• Profit Per Employee

Outcomes provide the evidence that separate the successful talent management strategies from the failures.  Unfortunately, many business
managers do not take time for evaluation of organizational outcomes.   

Why should companies  invest in new recruitment and selection solutions?

Employee turnover is very costly, yet many firms seem unable or unwilling to do what it takes to stop it.  Hiring mistakes include the cost of
termination, replacement, vacancy and learning curve productivity loss.  Mistakes are much more costly than most managers realize!  Click
here for a detailed review of the high cost of hiring mistakes.  The U.S. Department of Labor estimates that hiring the wrong entry-level person
can cost an organization more than $5,000 within the first three months. At higher organizational levels, these costs increase.  Hiring the
wrong manager at $100,000 per year costs an employer about $300,000.  It costs about $4900 to hire the wrong engineer.  It costs about
$2500 to hire the wrong computer programmer.  HR Magazine reported that employee turnover and retraining cost U.S. companies about
$1 billion annually. As the above statistics show, it is easy to make a strong business case for investing in new recruitment and selection solutions.

How do we estimate ROI from investments in new recruitment and selection solutions?

Investing in e-Recruitment technology (e.g. Total APS) automates processes, reduces costs, shortens  time to fill, improves the quality of hire,
and it also improves the company’s image among candidates.  The right investment can also reduce the total number of HR staff needed and
it should pay for itself within a short time frame.  Even with all of the above ROI outcomes, it is still necessary to evaluate new talent management
processes and outcomes. Recruiters, charged with filling vacant positions quickly, should now have more time to build relationships with the most
desirable candidates and more time to sell the organization as the right place to work.  The greatest ROI occurs when the CEO and other senior
managers champion the new initiatives.  The Senior Managers send the message that the new talent management initiatives are a strategic
priority that everyone needs to support.

The War for Talent Will Continue to Heat Up in Coming Years

The accelerating exodus of aging baby boomers from the workforce is a pressing problem for many organizations, especially within management
positions.  Those organizations that develop the ability to find, hire, and retain good people, will have a valuable competitive advantage in
replacing the aging workforce.

Workforce Planning

Organizations will need to engage in workforce planning.  The table below shows:

Projected Population of the United States, by Age and Sex: 2000 to 2050 

     Age Group           2000                            2010                    2020                      2030                     2040                       2050 

Recruitment Process Improvements 

E-recruiting improves how quickly and inexpensively a candidate pool can be created.  In addition to expanding sourcing alternatives and recruitment
efficiency, the quality of initial orientation and training greatly influences the new employee’s perceptions of the organization and their attained level
of engagement and loyalty.  Addressing the new hire’s future development needs is very important during the on-boarding phase, because it is
during this time that new employees become integrated into the organization’s culture, get up to speed and begin contributing. Reviewing the individual
development plan during the initial orientation of a  new hire helps them realize that the organization is making a long term investment in their career,
which in turn facilitates long term retention. 

Is the organization getting the outcomes it desires?

Selection Ratio - The number of applicants per position should be substantially larger following the investment in a new e-Recruitment technology. 

Time to Fill – The number of days required to fill a position should be much less.                                   

Performance – Organizations should be hiring more employees who perform at the level of the top 20 percent in the position.  The metrics defining
high performance on the job should be clearly above the average performance metrics for the position.   

Retention - Total days or months employed should be substantially longer. 

Profit per Employee – As the number (percentage) of top performers grows within the organization, the organization can accomplish more with fewer people -
and the profit per employee should increase substantially.

              Dr. Neil Clark is the Executive Director of HireSmart, a human capital management firm in Mesa, Arizona.  

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