A Comprehensive Review Of Talent Management Best Practices 10 25 11

A Comprehensive Review of Talent Management Best Practices

TALENT MANAGEMENT BEST PRACTICES

A COMPREHENSIVE REVIEW

1OOMNI LMNI

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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 HR2. Integrating people processes into standard business processes3. Shifting responsibility to managers4. 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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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:

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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CORE TALENT PROCESSES:

*Performance Mgmt. *Hi Po Identification *Development *Succession *Talent Acquisition

BUSINESS RESULTSBUSINESS STRATEGY





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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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.


Talent Management Redefined

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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 processes into standard business processes3. Establishing a talent system of record containing key talent measurements4. Shifting responsibility to managers and equipping them with comprehensive decision

support reporting capabilities to make key talent decisions5. 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 marginally successful – 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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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 Goalso Monitoring Performanceo Providing Performance Feedbacko Conducting Performance Reviewso Conducting a Developmental Planning Meeting

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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

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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.


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 accurately2. 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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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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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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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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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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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 learning can 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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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 performer2. Assess the level of advancement potential possessed by the

individual3. Ascertain the level of readiness to assume greater responsibility

now4. 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 top performer – Two pieces of information are important. 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 information2. Takes credit for others’ actions3. Fails to keep promises/commitments4. Fails to listen or be open to others5. Plays favorites6. Intimidates or bullies7. Loses composure under stress8. Micro-manages9. Fails to staff effectively

Derailing Characteristics

1. Overly critical or argumentative2. Overly needy of approval3. Arrogant or self-promoting4. Overly reckless or impulsive5. Risk averse6. Low tolerance for ambiguity

Derailing Deficiencies

1. Lacks accountability/follow through2. Lacks initiative3. Lacks focus or priorities4. Lacks self-awareness5. 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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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 degree2. Playing with dates3. Exaggerating numbers4. Increasing previous salary5. 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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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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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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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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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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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.

4) Behavioral Simulations

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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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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:


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Economic Trends

Industry Trends

Organizational Characteristics

Leadership and Culture

Job Characteristics

Individual Characteristics




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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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 Characteristics are 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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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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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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References:

DDI Survey from the 2006 Conference Board Talent Management Strategies Conference, www.ddiworld.com.

Emerging Workforce Study, Harris Interactive on behalf of Spherion Corporation, (2005)

Global Leadership Forecast 2008/2009. Ann Howard and Richard Wellins, Development Dimensions International.

Growing Global Executive Talent: High Priority, Limited Progress. Survey of 412 executives conducted by the Economist Intelligence Unit (EIU) in September and October, 2007.

High Impact Succession Management Study. Center for Creative Leadership, 2009.

Mercer Survey results cited in Performance Appraisals: some improvement needed – Executive Briefing (HR Magazine (2003).

Performance Management Do’s and Don’ts, SASCOM magazine (4th qtr. 2006).

Performance Management Practices Survey Report, Development Dimensions International (1997).

The Payoff of Pervasive Performance Management, BusinessWeek Research Services (May, 2008).

Succession Management Survey. Institute for Corporate Productivity, 2006.

Succession Planning: A Board Imperative, Dayton Odgen and John Wood, BusinessWeek, March 25, 2008.

Succession Planning Strategies. Aberdeen Group, November, 2006.

ThinkPeople-Power, Picking the Big Winners in HCM. ThinkEquity Partners’ Industry Report, February 14, 2008.

University of Minnesota Retention Study, Industrial Relations Center, Carlson School of Management; Dennis Ahlburg, Theresa Glomb, Connie Wanberg, John Kammeyer-Mueller, & Aichia Chung (2003).

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http://www.ddiworld.com/

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