A Comprehensive Review Of Talent Management Best Practices 10 25 11
1. A Comprehensive Review of Talent Management Best Practices
TALENT MANAGEMENT BEST
PRACTICES
A COMPREHENSIVE REVIEW
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2. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
TABLE OF CONTENTS
What is Talent Management? ........................................................................................ 3-7
Historical Roots ................................................................................................................. 3
The Impact of Technology ................................................................................................ 4
Moving Toward Effective Talent Management ........................................................... .5-7
Performance Management–Cornerstone of Talent Management…. ....................... 8-11
Overview ........................................................................................................................... 8
Best Practices – The Keys to Delivering Value .......................................................... 9-10
Summary Conclusions.................................................................................................... .11
Identifying High Potentials – Preparing for the Future .......................................... 12-17
Overview ......................................................................................................................... 12
The Mystery of Potential – Common Approaches & Problems in
Measuring Potential .................................................................................................. 12-14
A Conceptual Model of Potential and Best Practice for
Measurement ................................................................................................. .15-17
Individual and Group Development.......................................................................... 18-21
Overview of 360 Surveys for Developmental Planning.................................................. 18
An Alternative Approach .......................................................................................... 19-20
Best Practices for Development Talent .................................................................... .20-21
Succession Planning – Developing Bench Strength ................................................. 22-25
Overview ................................................................................................................... 22-23
The Core of Succession Planning – A Best Practice
Talent Review Process .................................................................................... 23-25
Deploying Talent – Putting the Right Person in the Right Job
Job at the Right Time .............................................................................................. 26-33
Overview ......................................................................................................................... 26
A Review of Selection Tools and Best Practices ...................................................... 26-33
Managing Retention and Turnover........................................................................... 33-38
The Difference Between Wanted vs. Unwanted Turnover ............................................. 33
A Model of Turnover ................................................................................................ 34-36
Best Practices for Managing Turnover ...................................................................... 37-38
References .......................................................................................................................... 39
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WHAT IS TALENT MANAGEMENT?
Historical Roots
The term Talent Management was first coined in an often cited 1997 article by McKinsey, which
focused on the emerging “war for talent”. Popularized in the 2000’s, various pundits have
offered a definition. Dr. John Sullivan, a popular expert on the subject, suggested in a 2004
Electronic Recruiter Exchange article that four key factors distinguish Talent Management from
traditional HR approaches:
1. An integrated approach within HR
2. Integrating people processesinto standard business processes
3. Shifting responsibility to managers
4. Measuring Success with productivity
This definition has changed very little in the past decade, as evidenced by the various references
cited over the course of the second half of the decade:
Trends in Human Capital Management: The Emerging Talent Management
Imperative…Knowledge Infusion White Paper, July, 2006
“The process of managing the supply and capabilities of the workforce to meet
the demand for talent throughout the organization to achieve optimal business
performance and in direct alignment with organizational goals.”
The Official ASTD Blog May 8, 2009
“A holistic approach to optimizing human capital, which enables an organization
to drive short and long term results by building culture, engagement, capability,
and capacity through integrated talent acquisition, development, and deployment
processes that are aligned to business goals.”
It became clear that a central theme of talent management definitions was a focus on integrated
core processes. Talent management was being seen as synonymous with integrating core HR
talent processes.
New Talent Management Networks (NTMN) annual talent management report cited in
HBR Answer Exchange 5/24/2010
“…companies define talent management largely as consisting of succession
planning, high potential identification and development, assessment and feedback,
and career planning/development.”
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WHAT IS TALENT MANAGEMENT?
The Impact of Technology
The advent of Software as a Service (SaaS) drove an inflection point in the growth of the Talent
Management technology market. The market wanted easy and fast access to technology that
would help them move toward this exciting concept of integrated Talent Management. Guided
by the accepted definition, with its central focus on talent processes, technology vendors
developed integrated, automated processes focused on talent acquisition, performance
management, development, and succession. The technology vendors focused on automating the
core talent management processes that were seen as being at the core of Talent Management.
The market philosophy of the technology vendors is illustrated in the graphic below:
CORE TALENT
PROCESSES:
*Performance Mgmt.
BUSINESS STRATEGY BUSINESS RESULTS
*Hi Po Identification
*Development
*Succession
*Talent Acquisition
This model positions automated process at the center of Talent Management sandwiched
between bookends of business strategy and business results. The basic message is to align your
core talent processes to the talent needs of your business strategy in, order to drive business
results.
While these solution platforms have contributed substantial efficiency gains through process
automation, there is reason to question whether they have also made contributions to increasing
talent management effectiveness.
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WHAT IS TALENT MANAGEMENT?
Moving Toward Effective Talent Management
Three additional components need to be added to the historical model to move the model closer
to one guiding effective talent management:
1. Talent Measurements – The basics of a Talent System of Record
You cannot manage what you cannot measure. In order to improve Talent Management
effectiveness, you need to establish a system of record for talent assets that include
proven and reliable talent measurements related to successful performance. Sadly, the
concentration on process automation has neglected generating the talent measurements
needed for effective talent decision-making.
The data deficiencies of talent management solutions have been noted by industry
analysts:
“The big problem with HCM (Human Capital Management) applications is the
data. Companies do not have the content or data to understand who their best
people are and why” (ThinkEquity 2008 Industry Report).
The graphic below suggests the types of talent measurements that are needed to establish
a talent system of record that supports effective Talent Management. In order to generate
this record, a broad range of fully integrated assessment and evaluation tools are needed
in the Talent Management solution.
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WHAT IS TALENT MANAGEMENT?
Moving Toward Effective Talent Management
2. Analytics – Decision Support Reporting for Managers
Once a talent system of record has been generated, it is critical to leverage those
measurements through thoughtfully designed analytics that drive and inform the talent
decisions made by managers. Effective Talent Management requires going beyond
automated processes to presenting line managers with reliable information in a format
that supports evidence based decision-making. On demand reporting should help
managers answer the four basic talent decisions that need to be made for any pivotal
talent pool:
Who are my top performers both in terms of results achieved and how those
results were achieved
Where do I focus individual and group development efforts to maximize ROI
Which of my top performers also possess high advancement potential and where
should I focus career development efforts
Which of the high performing high potentials are ready now for a higher level of
responsibility
Analytics are used to manipulate and leverage the core measurements needed to answer
these questions.
3. Going Beyond Competencies - Competency models are an important component of an
integrated talent management solution. They provide a common language used across
core talent processes and describe the behaviors associated for success for any given
position in the organization. An effective talent management solution should be able to
support and drive custom competency models as well as offer rich native competency
content for all levels of positions within an organization. An effective competency model
would have the following key content components:
Competency Label
Definition
Key Behaviors
Performance Standards
Interview Questions
Development Guides
While competencies are an important component of an integrated talent management
strategy, success profiles for positions need to be more comprehensive than just
competencies. A common language is also needed for defining experience requirements,
key traits, motivations, and technical/functional requirements. A common language
allows companies to create position profiles which can then be scientifically compared to
the talent system of record to quantify the degree of match between a given individual
and a specific position.
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WHAT IS TALENT MANAGEMENT?
Talent Management Redefined
John Sullivan’s original suggested key factors for characterizing and defining talent management
were accurate but deficient to fully differentiate strategic talent management from traditional HR
practices. We have suggested three areas that should be integrated into the original list. We
suggest that Talent Management should be redefined in the following manner:
1. An integrated approach within HR based on a common language for defining and
profiling success (e.g., competencies, experiences, behavioral predispositions, work
preferences, etc.)
2. Integrating people processesinto standard business processes
3. Establishing a talent system of record containing key talent measurements
4. Shifting responsibility to managers and equipping them with comprehensive decision
support reporting capabilities to make key talent decisions
5. Measuring Success with productivity
These modifications incorporate the three key additions of talent measurements, reporting
analytics and rich underlying content needed to complete the components of effective Talent
Management.
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PERFORMANCE MANAGEMENT – THE CORNERSTONE OF TALENT MANAGEMENT
Overview
Performance management is often portrayed as the most strategic of core talent management
processes. It has captured the attention of C level leaders with the following value promises:
Focus all employees on priorities and maximize individual productivity
Provide a foundation and process for improving the overall capabilities of organizational
talent
Align individual efforts with the business unit and organizational goals to maximize
efficiency and effectiveness of organizational execution
Align rewards and recognition with performance outcomes to ensure retention of key
performers
However, the question needs to be asked, “How well has performance management delivered on
these promises?” Survey data have not been encouraging. Consider the following findings:
Performance management is an inconsistently implemented process – A recent study by
Mercer found that just one third of survey respondents said they had had a formal
performance appraisal in the last year.
Performance management has had little impact on performance improvement – The same
study by Mercer also found that nearly half of those that had received a formal
performance appraisal indicated that it did not help them identify actions they could take
to improve.
There is little alignment with organizational goals – A recent Performance Management
Practices Survey Report published by Development Dimensions International found that
“Aligning performance management to support organizational goals and to integrate with
other systems proved to be the least common quality of performance management
systems”.
Aligning pay with performance has been only marginallysuccessful – A recent survey of
American Compensation Association members found that the majority of members felt
that merit pay plans tying pay to performance were only marginally successful.
Does Performance Management Deliver Value in Best of Class Organizations?If the value
realized from performance management has been modest for most organizations, one might
wonder if there is greater value for best of class organizations. These data are much more
encouraging:
Organizations exercising world-class enterprise performance management, including
widespread dispersal of the tools, enjoy 2.4 times the three-year equity market returns of
typical companies in their industry (BusinessWeek Research Services 2008)
Organizations in which employees are measurement-managed were identified as being in
the top one-third of their industry. Performance measurement was the single most
important measurement area that separates successful firms from less successful firms
(Towers Perrin 2002)
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PERFORMANCE MANAGEMENT – THE CORNERSTONE OF TALENT MANAGEMENT
Best Practices - The Keys to Delivering Value
If performance management delivers value in best of class organizations, what are they doing
differently than most organizations? Various authors and research studies have attempted to
identify what are the key drivers in delivering real value from performance management
processes. A summary of key findings are offered below:
Avoid making it too complicated – Many organizations make the mistake of creating too
many goals and gathering too many metrics in their performance management process.
The result is tremendous time investment and employee confusion. BusinessWeek
Research Services (2008) found that “Determining the appropriate number of goals and
types of metrics was considered the number one performance management success
factor.”
Provide a supportive culture – Performance management has to be supported by senior
executives. They need to foster a supportive culture in order to realize real value. The
same study from BusinessWeek Research Services (2008) found that “The biggest
obstacles to widespread execution of performance management are “lack of
accountability” and “a culture that does not support measurement.”
Make it widespread and consistent – Performance management needs to be an enterprise
wide practice in order to realize full value. This was a finding supported by
BusinessWeek Research Services (2008). This study indicated that, “The biggest return
comes from extending performance management to front line workers”. Typically,
technology is needed to provide widespread access and use. However, remember rule #1
to keep it simple. Lots of bells and whistles not only results in difficult and costly
implementations, the added complexity also results in line managers and front line
workers rejecting the technology.
Don’t forget foundation skills – Performance management in more than standardizes
processes and measurements. Real value is dependent on the interactions between
employees and managers. In an international cross study of performance management
practices published in SASCOM magazine (4th qtr. 2006), the authors concluded
“Overall the research shows that successful performance management efforts combine
the measurement process with appropriate infrastructure, skills, and culture.” Managers
need to have basic skills to manage performance effectively. These skills include:
o Setting Performance Goals
o Monitoring Performance
o Providing Performance Feedback
o Conducting Performance Reviews
o Conducting a Developmental Planning Meeting
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PERFORMANCE MANAGEMENT – THE CORNERSTONE OF TALENT MANAGEMENT
Best Practices - The Keys to Delivering Value (cont.)
Align individual performance goals with organizational goals – Linking the goals of an
individual with the broader goals of a business unit or an organization is called cascading.
In order to optimize strategic value, performance management processes should help
ensure that the efforts of all employees are in alignment with the goals of the
organization. Aligning performance management to support organizational goals and to
integrate with other systems proved to be the most critical differentiator in system
effectiveness (DDI - Performance Management Practices Survey Report).
Focus on both the “what’s” and the “how’s” of performance – Job performance is not
one-dimensional. Focusing only on what was accomplished ignores the importance of
how the results were achieved. Adding goals for competencies that are needed to support
results in the plan ensures both aspects of performance are considered. Performance
against competency goals can be reliably tracked using multi-rater or 360 data. These
data along with appropriate development content and support processes also help drive
individual development planning. In spite of the value received from including
competencies, the DDI Performance Management Practices Survey Report found only
38% of organizations followed this practice.
Make it a process not an event – In most organizations, the Performance Review is
typically treated as a single event, looking backwards rather than forward. Making it an
ongoing process requires anticipating problems and focusing on the present or future.
This means that managers need to have frequent ongoing discussions throughout the year
planning and communicating with employees to improve current and future performance.
Focus on development and improvement, keep pay discussions separate - Rensis Likert
offered this critique of the performance review discussion in the July 1959 issue of the
Harvard Business Review, “The aim of reviewing the subordinate's performance is to
increase his effectiveness, not to punish him. But apart from those few employees who
receive the highest possible ratings, performance review interviews, as a rule, are
seriously deflating to the employee's sense of worth ... not only is the conventional
performance review failing to make a positive contribution, but in many executives'
opinions it can do irreparable harm.” Samuel Culbert, a professor of management at
UCLA and Lawrence Rout, a senior editor at the Wall Street Journal concur in their
book, "Get Rid of the Performance Review!," These authors contend that the typical
performance review discussion derails due to differences in the mindsets of the two
participating parties. The employee is concerned about the impact of the review on
his/her pay. This leads to the employee focusing on defending mistakes, justifying
actions, promoting their accomplishments, and challenging the manager’s evaluations.
At the same time the manager is trying to engage the employee in a discussion of how
performance could be improved. The net result is that both parties feel frustrated by the
discussion.
The purpose of performance review discussions should be on development and improvement.
Discussions about pay should occur separately and recognize that pay decisions are only partially
informed by performance. Organizational performance, the employee’s position within their pay
range, and external supply and demand factors also contribute significantly to pay decisions.
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PERFORMANCE MANAGEMENT – THE CORNERSTONE OF TALENT MANAGEMENT
Summary Conclusions:
It appears that performance management practice does not deliver on the promise of real value
for most organizations. Best in class organizations are realizing real value and it is the direct
result of applying best practices. In these organizations, senior leaders consider performance
management a key aspect of the organization’s culture and drive enterprise-wide usage. They
provide visibility to organizational goals and ensure that employee goals are linked to broader
business goals to accomplish focus and alignment of efforts.
Wide spread and consistent practices are enabled by practical, simple, and easy to use
technology. In addition to simplicity in technology, there is discipline in only focusing on those
goals and metrics that truly matter to keep administrative overhead to a minimum.
In addition to infrastructure, measurements, and processes, there is recognition that managers
need training in specific performance management skills. Effective organizations provide ready
access to core training and just in time refresher skill training.
There is a balanced approach to managing performance. Result goals are important but
competency performance is also considered a necessary component of the process. Competency
development is supported by multi-rater or 360 surveys, formal developmental planning, and
ready access to developmental content, processes, and forms.
Following these best practices should allow all organizations to realize the value promise of
performance management.
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IDENTIFYING HIGH POTENTIALS – PREPARING FOR THE FUTURE
Overview
According to a recent Wall Street Journal article, just 68% of companies formally identify high
potentials and only 28% of companies tell the employees they have been identified as high
potential individuals. It is hard to believe that if the individual is unaware they have been labeled
as such, that they are receiving any differential investment in their development. The data was
based on a survey by Towers Watson of 316 organizations in North America. I am willing to bet
these organizations were larger organizations and the true percentage of companies with high
potential programs is actually lower.
There are two reasons why more organizations do not have high potential programs:
1. Advancement Potential is a difficult construct to measure accurately
2. Developing high potentials requires structured processes and considerable resource and
focus
Measuring advancement potential in many organizations is just a popularity contest, a highly
subjective opinion that is proven wrong too often when high potential individuals fail to succeed
when they advance. High potential programs with high failure rates can be demoralizing rather
than positive and some organizations shy away from forming a program for this reason.
While high potential programs do require structured process, resource, and focus, can
organizations really afford not to implement such programs? In a recent global survey of 80
companies, 69% of companies say they are "somewhat" or "significantly" challenged to develop
the leadership talent required to compete in emerging markets (Corporate University Exchange,
Leadership 2012 Survey). The future demands that leaders be ready with the skills and
knowledge to compete. Developing high potential individuals is the key to building the
necessary bench strength.
The Mystery of Potential - Common Approaches and Problems in Measuring Potential
High Potential is defined as having a high likelihood of advancing one or more levels in the
organization. It is a predictive measure of being able to successfully navigate transitions across
leadership levels. While the definition of potential may be relatively well understood, an
accurate measurement of potential is not.
Potential is not always readily apparent. It is a quality that lies within the individual, much like
DNA. What are the component parts of potential? This is the mystery of potential. Once we
can unlock the DNA of potential and identify the component parts, we can then decide on
appropriate measurement strategies.
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IDENTIFYING HIGH POTENTIALS – PREPARING FOR THE FUTURE
The Mystery of Potential - Common Approaches and Problems in Measuring Potential (cont.)
Organizations repeatedly see individuals identified as high potential stagnate, struggle, or fail in
successfully making upward transitions. This suggests that significant problems exist with how
potential is measured today and how high potential individuals are identified. Companies clearly
recognize that these problems exist. In a recent global survey of 73 companies, 91% of
companies said they were challenged to identify high potential individuals early in their careers
(Corporate University Exchange, Leadership 2012 Survey).
There are three primary approaches used today to measure potential. Each approach and its
associated problems will be briefly discussed.
1. Performance - The most common practice is to use performance in the current role as an
indicator of future potential. The implicit assumption is that high performers also are
high potentials. Fully 86% of all organizations, and 95% of larger ones, look at the past
performance record of workers (May 2009 i4cp survey results).There are a number of
problems with this approach. The most obvious is that the competencies and challenges
faced in higher level positions are markedly different than competencies and challenges
faced in lower level roles. There is little overlap in the requirements for success so there
is little reason to believe that current performance in lower roles would be indicative of
success in higher roles. It is not surprising that a survey conducted by the Corporate
Leadership Council found that only “29% of high performers turned out to be high
potentials”. However, performance is a readily available measure and in the absence of a
conceptual model of potential, performance serves as a convenient but flawed measure of
potential. While performance does not equal potential, it should play a contributing role
in the identification of high potential individuals. It is a threshold condition. It is
unlikely that an individual will be seen as having high potential for advancement if they
are not successful in their current role.
2. Manager Nominations Using Structured Judgment Frameworks – Another common
approach is to ask the manager to make an informed judgment of potential considering a
defined set of standard elements. This approach has the advantage of considering
qualities other than performance and utilizes an implicit model of potential. In 2006, Fast
Company polled 20 key leaders in 16 companies to identify the most frequently used
elements in judging high potential. The following elements were identified:
Ability to Execute:
Have they performed well in varied assignments and stretch assignments?
Do they excel in ambiguous situations?
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IDENTIFYING HIGH POTENTIALS – PREPARING FOR THE FUTURE
The Mystery of Potential - Common Approaches and Problems in Measuring Potential (cont.)
Relationship Building /Influence/Communication Skills:
Can they build a strong case to influence their peers to their position/view?
What do others think of them?
What kind of impression do they make when I interact with them?
Passion and Ambition:
Do they have a sense of urgency around taking on challenging and
important projects?
Passion for Learning:
Do they have an openness to and passion for learning?
Are they highly motivated to continuously learn?
While these elements are “future oriented”, there is still concern about the extent that
current performance influences these judgments. There is also considerable concern
about the potential for bias in using judgments from a single rater (manager).
3. Higher Level Competency Models – Some companies recognize that the competency
requirements for high level leadership roles differ from the competencies required in
lower level roles and also recognize that a single rater approach invites personal bias.
Therefore, they assess lower level leaders using competency models for higher level
roles. Most commonly, this assessment is conducted through the use of a 360 or multi-
rater survey. This approach is positive in that it is both future oriented and overcomes the
reliability problems of measures from a single rater. However, there is a significant
problem in the opportunity for observation. Multi-rater surveys assume that the raters
have had sufficient opportunity to observe the core behaviors that define a given
competency. This condition is not met in cases when raters are asked to rate behaviors
that are not present or required in the current job. For example, it is difficult to obtain a
reliable measure of “Developing Organizational Strategies” if an individual has no
opportunity to perform the behaviors associated with the competency. When there is no
demonstrated behavior to base a judgment, one has to rely on inference. In this case, one
would have to infer future competence based on the individual’s understanding and
analysis of the strategies developed by current senior leadership. However this inference
may well be flawed since understanding strategies is demonstrated by different behaviors
than those required for actually developing effective organizational strategies.
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A Conceptual Model of Potential and Best Practices for Measurement
The following conceptual model is proposed for both understanding the components of potential
and suggesting a measurement strategy. The elements of the model will be discussed and a
supporting rationale for each component will be presented.
The first component of the model focuses on the hard-wired aspects of potential, what we refer
to as “raw potential”. There are two core elements of raw potential:
Behavioral Predispositions – Not everyone is naturally predisposed to assume
leadership roles. There are certain core traits or characteristics that are associated
with leadership advancement and success.
Best Practice: Personality constructs with proven validity in predicting leadership
success should be used as measures of this core element. Particularly useful are
proven personality instruments that provide an “overall leadership predisposition
scale”.
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IDENTIFYING HIGH POTENTIALS – PREPARING FOR THE FUTURE
A Conceptual Model of Potential and Best Practices for Measurement (cont.)
Cognitive Ability – There is increasing complexity in the challenges associated with
higher level leadership roles. Individuals need superior mental abilities in order to
understand and handle these complex problems, issues, and opportunities. Research
shows that cognitive ability is the single best predictor of leadership success.
However, not all cognitive abilities are necessarily valid predictors. Verbal reasoning
does not emerge as a strong a predictor as numerical and abstract reasoning.
Best Practice: Validated cognitive ability testing provides the best measure of this
component of raw potential.
The second component of the model focuses on the motivations and career ambitions of the
individual. It reflects the extent that an individual is motivated to apply energy and effort to
develop their raw potential.
Best Practice: Self-report measures can be used to gather key information on
motivations and preferences. Some key motivations include:
Interest in Advancement – A key consideration for identifying an individual as a
high potential is their level of interest in advancement. The opportunities and
challenges of senior leadership are not attractive to all individuals. They may
prefer a career path that allows them to grow their technical expertise or broaden
their scope of responsibilities within their current level of leadership.
Achievement Orientation – Grooming oneself for senior leadership roles is hard
work and often stressful. Individuals need to have a strong achievement drive to
prepare for future roles while remaining high performers at their current level.
The third component focuses on the amount of relevant experience an individual has acquired at
a given point in their career. Leveraging experience is the primary method for leaders to
transform their raw potential and realize their true potential. This element is highly amenable to
development and targeted assignments or experiences can improve an individual’s advancement
potential. Research has shown that there are specific experiences that are associated with
leadership development and success. These specific experiences can be categorized into four
higher level factors:
Managing a Business - Experience in managing core processes and activities
related to the success of a business.
Managing Relationships - Experience in managing interpersonal or business
relationships.
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IDENTIFYING HIGH POTENTIALS – PREPARING FOR THE FUTURE
A Conceptual Model of Potential and Best Practices for Measurement (cont.)
Overcoming Challenge/Hardship – Experience in handling adversity, challenges,
and problems.
Managing Development – Experience in broadening one’s global business
perspective and developing individual and group capabilities.
Best Practice: Leadership experience is best measured using a research based
inventory instrument.
The fourth and final element is demonstrated behavior. While there are significant differences in
the competency requirements for different levels of leadership, there is also some overlap. There
are core competencies that serve leaders at all levels and should be examined when considering
potential. Examples of these areas include:
Interpersonal influence
Communication skills
Adaptability
Emotional control
Integrity
Best Practice: A multi-rater survey provides an economical and reliable measure of
demonstrated behavior in core competency areas.
Standardized tools with appropriate norms provide the basis for integrating the overall
personality data, cognitive ability data, and experience data. These data can be combined into a
single norm based percentile standing. The recipe mix for integrating these data is an important
consideration to mitigate possible adverse impact effects while retaining predicting power.
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BEST PRACTICES
INDIVIDUAL AND GROUP DEVELOPMENT
Overview of 360 Surveys for Developmental Planning
The underlying assumption behind developmental 360 feedback systems is that an individual’s
self -awareness and perceived need for change will be enhanced by a systematic process of
introspection and the review and comparison of ratings from others (Church & Bracken, 1997).
However, traditional multi-rater approaches have shown a low level of agreement between self
and “Other’s” ratings. Self- ratings are typically higher than “Other’s” ratings by as much as one
half a standard deviation (Harris & Schaubroeck, 1988). This presents a challenging feedback
situation where there is little agreement between self- perceptions and other’s perceptions and
other’s ratings are generally much lower. Individuals may discount the ratings of other’s or
become defensive and de-motivated by the lower rating values.
Clearly, self-awareness is a key ingredient for performance improvement. The degree to which a
discrepancy exists between an individual’s self- rating and the average rating made by “Other’s”
in a 360 process has been conceptualized as an indication of the amount of self-awareness
possessed by the individual. Small differences are an indication of high self-awareness while
large differences would be seen as indicative of low self-awareness.
In addition to self-awareness, other factors have also been shown to have a systematic effect on
differences between self and “Other’s” ratings. The degree of direct contact between raters and
the target individual can contribute to rating differences (Pollack & Pollack, 1996). The nature
of the competency being rated can also contribute to differences between self and other’s ratings.
Lower levels of agreement are associated with ambiguous (difficult to observe) competencies,
higher levels of agreement are associated with more concrete (observable) competencies (Dai,
Stiles, Hallenbeck, & DeMeuse, 2007).
High levels of self – others agreement have been associated with a number of positive outcomes
relevant for human resource practitioners. Some of these positive outcomes include perceived
need for change (London & Smither, 1995), performance improvement after feedback (Atwater
& Yazmmarino, 1992; Atwater et al., 2005; Johnson & Ferstl, 1999) and leadership effectiveness
(Atwater, Rouch, & Fischthal, 1995).
While self-ratings are typically viewed as unreliable and excluded in the calculation of
competency performance in 360 feedback reports, there is evidence that self-ratings can be
reliable and valid measures in certain circumstances. In a study conducted by the US Army
Research Institute, self- ratings were found to have a stronger correlation with leadership ability
than either peer or superior ratings (Psotka, Legree, & Gray, 2007). It was hypothesized that a
structured process consisting of regular superior reviews facilitated an accurate introspection and
was responsible for the strength of the correlation.
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An Alternative Approach
Is a lack of self-awareness responsible for low self-other agreement? It could easily be argued
that the degree to which a discrepancy exists between an individual’s self- rating and the average
rating made by “Others” in a 360 process should be an indication of the amount of self-
awareness possessed by the individual. Small differences would be an indication of high self-
awareness while large differences would be seen as indicative of low self-awareness. I suspect it
is not because individuals have such little self-awareness. It probably has more to do with the
traditional 360 process which creates a scenario which encourages self-promotion.
Omni has developed a unique approach to multi-rater surveys that was designed to maximize
self-awareness and show higher congruence in self-other’s ratings compared to traditional
approaches. In this process, the individual rates their performance in comparison to structured
performance standards for each behavior within a competency. The self -ratings are then shared
with the other raters along with the performance standards to gather their perceptions of
agreement or disagreement. The combination of structured performance standards with a
transparent sharing of the ratings to others is felt to drive higher levels of introspection and self-
awareness.
We recently put this to a test in a research study with one of our client organizations. The results
were amazing. There was a highly significant relationship between self-ratings and the ratings
by others and no significant differences in their means. In fact, the self-ratings were slightly
lower than the ratings of others. It appears the Omni 360 process corrected the past problems
with inflated self-ratings and low self-other agreement. Of course, there is always a caution to
not overly extrapolate from a single study but these are pretty amazing results.
The benefits of this approach are most likely seen in performance feedback sessions and
subsequent developmental planning. These sessions will not have the difficult task of
overcoming potential defensiveness associated with other’s perceptions being much lower than
the individual’s self-perceptions. The higher agreement between self and others should also
make it easier for the individual to accept identified development needs as being accurately
measured which should increase their willingness to act on the data. Finally, the more thoughtful
introspection driven by the Omni process should help predispose the individual to receiving
feedback since they have already thought carefully about their true strengths and development
needs.
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An Alternative Approach (cont.)
There are likely to be other benefits to higher self-other agreement including a higher willingness
to participate in future 360 surveys. The process should be seen as less threatening by the target
individuals.
Given the absence of proven research, we need to continue to rely on our common sense in
implementing effective multi-rater programs (but we need to challenge our underlying
assumptions). A broader list of preconditions for effectiveness likely would include:
Acceptance of the data by the participant
The relative trainability of the target competencies
The quality of developmental planning
The level of support and follow up provided
Accountability for behavior change
Best Practices for Developing Talent
There are a number of proven approaches and best practices for developing talent. This list is
not exhaustive but contains proven strategies:
Stretch Assignments – Experience matters. Experience is the primary way critical
leadership skills are developed. However, the current roles of high potentials are not
likely to routinely afford the kind of opportunities that are most transformational. The
Center for Creative Leadership and others have researched the kinds of experiences that
are most important for leadership development. Stretch assignments should be
challenging in nature and designed to fill specific experience gaps.
Learning by doing - Action Learning involves working with others to analyze an actual
work problem and develop an action plan. The action learning team is typically cross
functional and diverse in background which provides an opportunity to be exposed to
other perspectives and parts of the business. Analyzing, planning, and implementing
solutions provides a rich foundation for learning by doing and has immediate practical
benefits for the organization.
Leaders developing leaders – Mentoring and coaching relationships with more senior
leaders are important to developing an appreciation for the realities and demands of
higher level jobs. The mentor provides a window into senior roles and passes on
important learning and insights that have been acquired from their experience.
Professional career coaches may also be assigned to high potential individuals.
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Best Practices for Developing Talent (cont.)
Feedback – All learning involves some form of feedback but formalized feedback
programs can be particularly effective. Feedback is typically focused on competencies
that are important for a higher level of leadership and involve some form of assessment.
The most powerful form of assessment utilizes behavioral simulations which parallel the
actual demands of higher level positions. To maximize learning, feedback is provided
immediately after participation in the simulation. More formal feedback is provided later
in the form of a written report. This report is used to structure an individual development
plan. Another common form of assessment is the use of multi-rater or 360 surveys. In
this approach, individuals that surround the individual on a daily basis provide ratings of
performance in specific competency areas. Again, the feedback report is used to guide
individual development plans.
Job Rotations or Shadowing – Job rotations are used to increase exposure to the business
as a whole. The individual is systematically moved laterally into temporary assignments
in various parts of the business. These assignments may last a year or more and provide
an opportunity to acquire new knowledge, learn new skills, and build a broad based
network of contacts. Another option is job shadowing where an individual is paired with
another person already performing in the role to learn how to perform in that role.
Blended Learning – Blended learningcan simply be defined as the use of two or more
learning technologies to deliver training (e.g., instructor led training might be blended
with online learning). Blended learning techniques are designed to take into account the
different learning styles of individuals and to match learning methods with the task or
skill to be learned.
Developing talent takes more than effective developmental processes. It demands a carefully
planned program with administrative controls, evaluation components, and organizational
commitment. However, proven developmental strategies are a definite pre-requisite for success.
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SUCCESSION PLANNING – DEVELOPING BENCH STRENGTH
Overview
Upcoming baby boomer retirements coupled with high executive failure rates and ever shrinking
and flattening organizations have caused corporate directors, CEO’s, and Senior Human
Resource professionals to wonder where successors are going to come from and how ready will
they be to assume key roles. There is little confidence in current practice:
16% of corporate directors feel they are effective at succession planning (National
Association of Corporate Directors, 2008)
38%of HR leaders rate their succession management practices as effective or very
effective (High Impact Succession Management Study, 2009 Center for Creative
Leadership)
70% of organizations surveyed plan to modify their succession planning processes
(Succession Management Survey 2006, Institute for Corporate Productivity)
Why the wide-spread dissatisfaction with succession management?
Problem 1: The Basics are Not in Place – Limited Talent Measurements or Relevant Information
“Clearly identifying the characteristics (skills, knowledge, personality, etc.) required for
successful performance, and then evaluating talent against those characteristics must be at the
heart of any talent management system (Survey from the Conference Board 2008 Talent
Management Strategies Conference)”. In order to evaluate talent readiness for a key role, you
need three core elements:
clear and sufficient definition of the requirements for success in the role.
reliable and predictive talent measurements relevant to the requirements.
a method for comparing or matching role requirements with talent profiles.
Too often, organizations naively feel that they “know” their leadership talent and key roles and
can make accurate subjective determinations of “fit” and “readiness” of potential successors for
key roles. There are limited attempts to bring in objective data beyond personal observations and
opinions. These practices have resulted in high failure rates. A Manchester Consulting study
found that 40% of newly promoted leaders failed within the first 18 months of being placed in
the role. Another global study conducted by Development Dimensions International found that
one third of internally sourced leaders fail.
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SUCCESSION PLANNING – DEVELOPING BENCH STRENGTH
Problem 2: Limited Consideration of the Business Context
While the first problem focuses on a lack of talent measurement, this problem focuses on a
failure to consider unique situational or work context variables. A CIO position in one company
may demand a very different set of executive qualities than a position in another company even
though their position descriptions may read very similarly. This is because so much of
leadership success depends on the business context surrounding a role. What are the key
challenges facing the role? Updating and integrating internal systems? Creating a new product
development vision and implementing new product development processes? What is the culture
of the company? Is it entrepreneurial? Is it overly conservative? What are the key stakeholders’
and senior executive teams’ characteristics and expectations? Who will fit in and who will not?
How is the role evolving? Is what is required today going to fit with the future?
Is there a good fit between their motivations and preferences and the realities and opportunities
of the future role? For example, if they are highly motivated by entrepreneurial opportunities,
are they a good fit for a future role that offers limited entrepreneurial opportunity? What is their
interest in advancement, travel, or global assignments? These interests may have significant
impact on their “fit” for certain future roles.
The Core of Succession Planning – A Best Practice Talent Review Process
The information gathered in a talent review process varies across organizations but the purpose
of the talent review should be the same:
1. Confirm that the talent is a top performer
2. Assess the level of advancement potential possessed by the
individual
3. Ascertain the level of readiness to assume greater responsibility
now
4. Plan appropriate development activities
Let’s look at the type of information that would be appropriate for accomplishing each purpose.
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The Core of Succession Planning – A Best Practice Talent Review Process (cont.)
Confirming that the talent is a topperformer – Two pieces of information areimportant. You
want to review the performance review history of the individual to determine the level and
consistency of results performance against goals. You would also want to review the history of
competency performance of the individual. This information may be part of the performance
review or obtained from 360 survey assessments. Ideally, the two dimensions of performance
would be plotted in a nine block report to confirm that the individual is achieving outstanding
results through the demonstration of exemplary behaviors.
Evaluating Advancement Potential – Earlier in this article, I put forth a quantitative approach
for actually measuring advancement potential. Ideally, subjective evaluations and quantitative
measurement would both be gathered and compared to validate the level of advancement
potential possessed by the individual at that point in time.
Evaluating Readiness to Advance – This judgment requires a definition of the requirements of
performance at a higher level of leadership and a systematic comparison of the talent against
each requirement to identify matches and non-matches. The talent profile is compared to the
requirement profile to determine the degree of “match”. Talent measurements and assessments
are a key component of creating a talent profile. The graphic below shows a match analysis for
some leadership experiences. The individual’s percentile norm standing is compared to the
criticality of each type of experience to determine if further development is needed:
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The Core of Succession Planning – A Best Practice Talent Review Process (cont.)
Developmental Planning – The comparison of the talent profile to the job requirement profile
identifies the gaps that need to be addressed. As has been already discussed, a variety of
developmental strategies may be used to prepare the individual for greater responsibility and
advancement.
Developmental planning should also include a review of any possible derailers that might be
present. A derailer is a weakness that, if not addressed or improved, will likely prevent a
potential successor from achieving their true potential. Here is a list of some common derailers:
Derailing Behaviors
1. Shares confidential information
2. Takes credit for others’ actions
3. Fails to keep promises/commitments
4. Fails to listen or be open to others
5. Plays favorites
6. Intimidates or bullies
7. Loses composure under stress
8. Micro-manages
9. Fails to staff effectively
Derailing Characteristics
1. Overly critical or argumentative
2. Overly needy of approval
3. Arrogant or self-promoting
4. Overly reckless or impulsive
5. Risk averse
6. Low tolerance for ambiguity
Derailing Deficiencies
1. Lacks accountability/follow through
2. Lacks initiative
3. Lacks focus or priorities
4. Lacks self-awareness
5. Lacks awareness of others
In a best practice talent review, it takes very little time or effort to discuss whether the individual
displays any derailer tendencies. If there is evidence that one or more may exist, it makes good
sense to integrate the issue into the individual’s coaching and development plan. Addressing a
tendency early in one’s career can prevent that career from stalling or going into a tail spin later.
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DEPLOYING TALENT – PUTTING THE RIGHT PERSON, IN THE RIGHT JOB, AT THE
RIGHT TIME
Overview
Employee selection is a critical component of effective Talent Management. A strong
employer brand can be a true competitive differentiator for an organization. Building a strong
brand starts with being concerned with the candidate experience during the selection process.
The initial experience of the candidate during the selection process is likely to have a major
impact on their view of the organization’s culture, their perception of the value being placed on
talent, and their perception of the sophistication of the organization’s talent management
processes.
Effective employee selection involves more than establishing a strong employer brand and
attracting and hiring superior talent. The key to effective selection is the ability to match the
right person for the right job at the right time. Retention rates, individual productivity, and
business competitiveness all hinge on effectively matching individuals to jobs. This white paper
provides an overview of common employee selection tools, identifies current trends that are
impacting how employees are selected and matched to jobs, and provides recommendations for
tool use.
A Review of Selection Tools and Best Practices
1) Candidate Pre-screening Tools
Candidate pre-screening refers to the initial evaluation of candidate qualifications at time
of application. The purpose is to reduce a potentially large candidate pool to a more
manageable number of candidates. While there is certainly a focus on efficiency in pre-
screening candidates, there is also a concern about accuracy. You do not want to advance
the wrong candidates or reject high quality candidates in the process. Three of the more
common approaches to candidate pre-screening include:
a) Resume Matching Technology – There are a number of technologies that have
been developed to search resume content for key constructs, phrases, or words
that are relevant for a given position. They provide a tremendous efficiency
advantage over manual resume reviews. Unfortunately, they are not necessarily
accurate.
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A Review of Selection Tools and Best Practices
1) Candidate Pre-screening Tools
Part of the problem is in the resume itself. According to research conducted by
The Society of Human Resource Managers, over 53% of individuals lie about
their resume in some way. Forbes Magazine has a list of the top lies people put
on their resumes. Some of the more common ones include:
1. Lying about your degree
2. Playing with dates
3. Exaggerating numbers
4. Increasing previous salary
5. Inflating titles
Another problem is candidates have learned to “seed” their resume with key
words and phrases that are likely to result in a false match with a particular
resume search.
Even when the resume is totally factual, it provides little information for truly
differentiating individuals against the full range of job requirements for a position.
b) Profile Matching Technology - The concept of matching people to opportunities
based on profiles is very familiar to most people today with the proliferation of
dating services that rely on this approach.
The approach is quite straightforward. The talent creates a profile of core
attributes relevant for their consideration as a candidate (e.g., industry experience,
management experience, salary preferences, etc.) and the profile is matched to the
position requirements provided by an employer. While conceptually sound in
theory, in practice there are problems. Most candidates are not willing to
complete a lengthy profiling process as a pre-screen. Lengthy profiles would
result in a high rate of abandonment. Therefore, the candidate match is only
based on a relatively small number of job requirements and many unqualified
candidates are incorrectly identified as a good fit.
In order to obtain a complete and useful requirement profile of a position for
accurate matching, it is important to consider a number of characteristics. These
characteristics could include:
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A Review of Selection Tools and Best Practices
Candidate Pre-screening Tools
Background requirements – e.g., desired industry/functional experience,
management experience, certifications, education
Contextual requirements – e.g., compensation, travel, specific role
challenges, and organizational culture demands
Personality requirements – e.g., key characteristics and predispositions
that would facilitate meeting the demands of the positions
Experience requirements – e.g., critical experiences necessary to prepare
an individual to be successful in the position
Competency requirements – e.g., behavioral skills associated with
successful performance in the position
Unique requirements – any special or unique requirements associated with
the position
It is for this reason job/talent matching is more appropriately applied later in the
selection process when the candidate is more motivated to provide a complete
profile.
c) Scored Application Forms- The application form is also a traditional source for
evaluating candidate potential. There is typically a lot of overlap in information
provided by a resume and information requested on an application form. The
primary difference is the application form is a structured process that solicits the
same information from all candidates. It overcomes the problem of difference in
resume content and formats. It also allows the addition of specific questions
regarding qualifications, preferences, and experiences that are important to the
employer.
Application items can be assigned a particular weight and value for different
responses. Automated routines can be used to score application forms thereby
eliminating the subjectivity of manual reviews and also addressing the criterion of
efficiency. They need not be overly long and still provide relevant information
concerning the full range of requirements. Scored application blanks have also
been shown to be reasonably accurate (Reilly and Chao, 1982; and Schmitt, Noe,
& Kirsch, 1984)
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A Review of Selection Tools and Best Practices
1) Candidate Pre-screening Tools (cont.)
d) Custom Screening Questionnaires – Custom screening questionnaires are similar
to application forms but are designed specifically for a particular job. Structured
questions that relate to the specific requirements of the job are created. These
questionnaires are most commonly presented online and scored in real time.
Differential weights are applied to candidate responses to create a weighted score.
Knock out factors on mandatory requirements are included. Resume data are also
captured and can be potentially scored.
Current Trends and Best Practices for Candidate Pre-Screening
Technology providers are increasingly integrating screening questionnaires and resume
review processes into selection workflow capabilities. The trend is to move beyond
simple efficiencies in selection to being concerned with quality of hire.Custom screening
questionnaires are recommended as the preferred method for candidate pre-screening.
They are highly efficient, provide a structured approach for reviewing candidates, and are
able to collect the job specific information necessary for making an accurate screening
decision. One would review the resumes of screened-in candidates before making a
progression decision.
Profile matching technology is recommended as an important component of the selection
process which would be used later when candidates are willing to provide a complete
talent profile.
2) Pre-Employment Tests
Pre-employment tests are quite prevalent today. According to a recent survey roughly 86%
of companies are using some form of pre-employment testing. While there are a large
number of different types of tests available, the two most common are:
a. Ability Tests– While there are a large number of different kinds of ability tests,
the most common type of ability test is a measure of cognitive or mental ability.
There is abundant evidence that this type of test is a strong predictor of overall
performance across a wide range of jobs. In an often cited paper, Schmidt &
Hunter (2004) provide evidence that general mental ability “predicts both
occupational level attained and performance within one’s chosen occupation and
does so better than any other ability, trait, or disposition and better than job
experience” (p. 162). There are three common types of mental ability tests.
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A Review of Selection Tools and Best Practices
i. Verbal Reasoning – Verbal Reasoning is the ability to understand and
reason using concepts framed in language. Critical thinking skills are
commonly measured with these tests.
ii. Numerical Reasoning- Numerical reasoning is the ability to use
numbers to develop, comprehend, and communicate ideas. Basic math
skills are essential to having good numerical reasoning skills.
iii. Abstract Reasoning - Abstract Reasoning is the ability to recognize
abstract patterns, associations, or relationships without using words or
numbers. Different from both Verbal and Numerical Reasoning,
Abstract Reasoning is right-brain dominated. It is a measure of an
individual’s ability to perceive and think clearly, make meaning out of
confusion, and formulate new concepts when faced with novel
information.
The main drawback to mental ability testing is evidence of adverse impact on
minority populations. Diversity goals are negatively affected by this type of
testing. Therefore, it is common practice to combine such tests with other tests or
selection procedures to dilute their adverse impact.
b. Personality Tests-Although personality tests measure a variety of specific
constructs, these constructs typically collapse to five basic factors of personality.
These factors, commonly called “the big five”, include: (1) openness to
experience, (2) extroversion, (3) agreeableness, (4) conscientiousness, and (5)
emotional stability. There is growing evidence of the usefulness of these factors
in predicting job performance (Barrick, M.R. & Mount, M.K., 1991).
When using personality tests, it is important to use those that were specifically
developed for selection rather than for general research on individual differences.
It is equally important to review the validity evidence for any selected instrument.
Additionally, there are concerns that candidates may be successful in faking
personality instruments. It is therefore important to select an instrument that
contains a well-designed “faking” scale as a key construct.
The lack of adverse impact and the consistent evidence of validity have made
personality testing a frequent component of selection procedures.
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A Review of Selection Tools and Best Practices
Current Trends and Best Practices for Candidate Pre-Screening
There is increasing support for a different type of norm based test called an Experience
Inventory. Everyone intuitively knows that experience matters when considering the
qualifications of a candidate…but which experiences? Extensive research on the types of
experiences that lead to leadership success has surfaced specific themes. Items have been
created for these themes which has led to the construction of norm based experience
inventories. These inventories are showing early promise as a new type of valid
predictor.
There is also a trend toward non-proctored web-based testing to provide greater
convenience for the test taker.
A recommended approach is to combine personality testing, experience inventories, and
mental ability testing to optimize the amount of predictive information that is gathered
while minimizing the adverse impact of the mental ability test. It is also recommended to
use numerical reasoning and abstract reasoning rather than verbal reasoning tests to
further lessen adverse impact. Short forms of tests should be used when available to
reduce the time required for test completion. Generally, testing should usually be
positioned later in the selection process with candidates that have passed earlier hurdles
and are motivated to complete the testing process. Test results should be used in
matching talent profiles to job requirements.
3) Interviews
Interviews are the most ubiquitous selection tool in use today. They are also the selection
method with the poorest execution. Many interviews are more of a “personal chemistry”
check than a reliable and accurate evaluation of qualifications. Interview practices can be
sorted into two basic categories:
a. Structured Behavioral Interviews -There is a considerable body of research that
supports the power of the interview when it is a structured process. When
interviews are structured, they have considerable reliability and predictive value
and are a powerful selection tool.
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A Review of Selection Tools and Best Practices
Structured interviews:
Use competencies as the framework for structuring the interview.
Competencies are based on a job analysis which is a systematic review of
what it takes to be successful in a particular job.
Use pre-planned interview questions that are linked to competency
requirements. This ensures that the interview questions are job related. Pre-
planned questions also ensure that the same questions are asked of each
candidate to ensure consistency and “apple to apple” comparisons. Every
candidate has the same opportunity to demonstrate they have the knowledge,
skills, and background to perform the job.
Use trained interviewers. Interviewers are trained in how to evaluate
responses to prepared questions. Training helps take the bias and subjectivity
out of the evaluation process and gives interviewers a common frame of
reference for evaluating candidates.
Ratings are integrated in a common way to arrive at an overall score as well as
a profile of strengths and weaknesses.
b. Unstructured Interviews- Research suggests that when interviews are
unstructured, they are little better than flipping a coin. Unstructured interviews
are characterized by:
Each interviewer decides where they would like to focus their information
gathering.
Each interviewer comes up with their own questions
Each interviewer uses their own evaluation framework for evaluating
responses
Each interviewer integrates the interviewee responses in their own way to
reach conclusions
Current Trends and Best Practices for Interviews
Web-based interviewing solutions are now available in the market to help drive
consistency, accuracy, and to reduce legal exposure. These interviewing platforms also
make it easier to deploy and bring value to competency modeling efforts.Combine online
interviewer training with an online interviewing management system to create structured
interviews, manage the entire interview process, and equip interviewers with the tools
and skills to conduct accurate interviews.
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33. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
4) Behavioral Simulations
Simulations are designed to mirror important challenges within a particular job. When
properly designed, they provide candidates with a realistic view of the skill requirements
of the position and provide a forum for the candidate to demonstrate job relevant skills in
a high fidelity representation of critical job demands.
Current Trends and Best Practices
There are an increasing number of web-based simulations. Virtual reality technology is
transforming the ability to simulate realistic work challenge and capture realistic
candidate responses. However, it will still be some time before technology can replace
trained assessors for providing insightful feedback and maximizing developmental
impact.Use behavioral simulations at the executive level – The time and costs associated
with simulations and trained assessors can be justified at the executive level. The impact
of an executive’s performance on the organization argues strongly to take the time to
thoroughly review candidate skills and qualifications.
MANAGING RETENTION AND TURNOVER
The Difference Between Wanted vs. Unwanted Turnover
Not all turnover is bad. In fact, turnover rates that are very low could well be damaging to an
organization. Very low turnover is likely an indication that poor performance is being tolerated.
Every organization has some level of poor performers that are not responsive to coaching, and
should be released (or placed in position that is a better fit). There is also likely some level of
bad managers that are having even greater negative impact than poor performing individual
contributors. It could even be argued that losing an average performer is not bad, if they are
replaced with a superior performer. Upgrading the talent in an organization is both a function of
internal development and effective external selection.
Very low turnover also restricts the amount of new ideas and perspectives that are coming into
the organization, which could easily stifle innovation and bring about stagnation. There could
also be a situation where the business strategy is not in alignment with the talent currently
available in the organization. Individuals with different knowledge, skills, or experiences may
be needed from the outside to execute the business strategy.
An organization’s retention goal should be to reduce unwanted turnover. Unwanted turnover
would include turnover of top performers, key leaders, high potential individuals, and individuals
with business strategy critical skills. Unwanted turnover would also include individuals with key
client relationships or other contacts, top revenue producers, and innovators or thought leaders.
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34. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
MANAGING RETENTION AND TURNOVER
A Model of Turnover
As the economy improves, turnover is likely to become a major concern for organizations.
Unwanted turnover represents costs that are greater than simple replacement costs. The costs of
losing a good performer are greater than the costs of losing an average performer. The true cost
of losing a key seasoned player is hard to estimate. There is the investment in development of
the employee, the value of the knowledge and experience gained, and the lost productivity, that
also have to be considered to arrive at a true cost figure. However, much turnover (up to 50% or
more) occurs within the first six months of employment and, in an early departure scenario, the
bulk of the costs are replacement costs. When an organization starts to lose significant numbers
of senior employees, it is usually indicative of even more serious organizational problems.
However, the factors that influence turnover rates go well beyond organizational problems.
Organizational characteristics are only one of the variables that will impact an organization’s
turnover rate. To understand the variables that impact turnover, I have provided the following
model:
Economic Trends
Industry Trends
Organizational Characteristics
Leadership and Culture
Job Characteristics
Individual
Characteristics
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35. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
MANAGING RETENTION AND TURNOVER
A Model of Turnover
Economic Trends-In this model, the overall economy sets the stage for alternative employment
opportunities. Generally, in a tight economy, there are less alternative opportunities. Employees
are less willing to leave their current jobs, even if they are dissatisfied.
Industry Trends- Industry trends interact with the general economy. Let’s take the example of
the high tech industry. High tech is fueling a significant portion of the general economy. In a
high tech economy, there is a premium placed on up-to-date training, which has the impact of
heightening job opportunities for recent graduates, but reducing opportunities for workers over
50 years of age. A booming high tech industry also tends to create fewer lower wage jobs, limits
new opportunities for these jobs, but also creates a demand for more knowledgeable workers.
The opportunities for these workers are huge and makes for a “sellers” market. The net effect is
that turnover is very high in this industry, with a resulting heavy reliance on contract workers.
Organizational Characteristics- Nested within an industry is the specific organization. Within
any industry, there are some organizations that simply do a better job of retaining employees
than others. Some of this has little to do with enlightened practices and is simply a product of
workforce demographics. All things being equal, a younger workforce will have more job and
company changes than an older workforce. Part-time personnel are less stable than full-time
personnel, and a workforce with greater average tenure will have less turnover than a workforce
with less average tenure. Another key organizational characteristic is company performance.
People are less likely to leave a company that they identify with and can take pride in its positive
business and community performance.
Leadership and Culture are both strong determinants of turnover intentions. Bad managers can
cause good employees to leave. Problems or conflicts with the immediate supervisor are one of
the most frequently mentioned reasons employees cite for leaving a company in their exit
interviews.Company culture is determined by a bunch of things but for discussion, let’s just
focus on company attitudes toward skill development and rewards/recognition.
Skills - The emphasis an organization places on developing the skills of its employees
will have an impact on turnover. Companies with low unwanted turnover rates tend to
spend more money and time on skill development than those with high turnover rates.
Rewards/Recognition – The philosophy of the company concerning pay will impact
turnover. A recent study by Spherion indicated that 69% of employees considered pay to
be a key driver of retention. Companies that are willing to pay for top talent generally are
more likely to retain that talent. However, rewards don’t have to be monetary in order to
have an impact. Positive feedback, formal recognition programs, and challenging and
interesting work assignments are all ways to provide rewards and recognition for top
talent.
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36. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
MANAGING RETENTION AND TURNOVER
A Model of Turnover
Job Characteristics impact job satisfaction which in turn impacts turnover. Research suggests
the following job characteristics are impact job satisfaction:
Variety – Jobs that offer a greater variety of tasks are associated with higher satisfaction
levels
Autonomy – Jobs that offer greater freedom and choice in execution (i.e., empowerment)
are associated with higher satisfaction levels
Identity – Jobs that offer a sense of ownership and personal accountability are associated
with higher satisfaction levels
Feedback – Jobs that offer intrinsic feedback on quality of performance are associated
with higher satisfaction levels, and
Significance – Jobs that are perceived as important are associated with higher job
satisfaction.
Individual Characteristicsare the final determinant of turnover. There are intrinsic individual
differences that affect turnover as well as individual situational factors. Risk adverse individuals
with higher needs for security are generally less likely to turnover. Individuals with local ties or
financial dependencies are generally less likely to turnover.
A recent retention study by the University of Minnesota compared individual differences
between “leavers” and “stayers” in seven different organizations over a time period of 20
months. Leavers generally had (1) lower perceived costs of a job change, (2) lower
organizational commitment or identification with the company, (3) lower job satisfaction, and/or
(4) had a negative recent experience or event in the company.
Best Practices for Managing Unwanted Turnover
While there are many possible strategies to reduce unwanted turnover, I would like to focus on
six key areas:
Early Interventions
Skill Interventions
Leadership Interventions
Rewards/Recognition Interventions
Selection Interventions
Job Enrichment
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37. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
MANAGING RETENTION AND TURNOVER
Best Practices for Managing Unwanted Turnover
Early interventions – The fact that large numbers of employees turnover in the first six months of
employment suggests that this is a critical time for helping people adjust to new roles. Effective
on-boarding programs should cover this critical period. A good on-boarding program helps
prevent misunderstandings, gradually introduces the employee into the organization, and
provides just in time information and training. Most importantly, establish a support system for
the new employee. A good practice is to set up a “buddy” system for new employees. A
“buddy” is a seasoned employee who volunteers to “look out for the new employee”, making
introductions, providing advice, and helping avoid early pitfalls.
Skill interventions– Keep employees motivated and committed by enthusiastically offering
training and development opportunities. Smart companies know the importance of personal
development in employee retention. Top rated companies to work for have several qualities in
common. They spend considerable time in training their people, they have low turnover rates,
and they have impressive numbers of applicants per job opening.
Leadership interventions – Better Bosses mean lower turnover. Establishing performance
expectations, providing coaching and positive feedback, and interacting in a fair and considerate
manner are all things that good leaders do to help new employees be successful and receive
enjoyment from their jobs. To impact turnover, make sure that supervisory promotion and
training programs have interpersonal skills as part of their focus. Measure employee perceptions
of leadership behaviors and incorporate behavioral expectations into leaders’ performance
management expectations.
Rewards/recognition interventions – Various kinds of contingent bonus strategies can be used to
help with retention. Deferred bonuses are paid out incrementally with a significant back-end
payoff for a combination of performance and retention. This type of bonus system can help
guarantee service for a finite number of years but doesn’t address long term retention.
Performance bonuses can help an employee reach high levels of income providing they can
consistently demonstrate superior levels of performance. This type of bonus can be very
effective if performance metrics are readily available and additional costs are consistent with the
value of superior performance. If you can’t afford to pay more, or offer contingent pay, don’t
forget the value of non-monetary or symbolic rewards like time-off, awards, and other
recognition programs.
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38. A COMPREHENSIVE REVIEW OF TALENT MANAGEMENT
BEST PRACTICES
MANAGING RETENTION AND TURNOVER
Best Practices for Managing Unwanted Turnover
Selection interventions– Perhaps the most powerful weapon against turnover is improved
selection. A well-known consulting company documented 21 studies of the impact on turnover
of introducing a structured interviewing selection system. Improving interviewing procedures
reduced turnover rates on average a whopping 42%. Putting the right person, in the right job, at
the right time, is critical to effective talent management and to preventing unwanted turnover.
Job enrichment– Increasing the job satisfaction of high turnover jobs can reduce turnover. For
individuals who have a need for growth, the following job design strategies are associated with
increased job satisfaction:
Increase the variety of tasks performed
Provide greater ownership and decision-making on how the job is performed and hold the
job holder accountable for quality of outputs
Add more significant responsibilities
Improve the accuracy and quality of feedback on performance
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