The Top 22 Business Processes which Drive Business Impact
In 2007 we conducted one of the largest-ever studies of corporate talent management: we interviewed and surveyed more than 750 corporations to gain an understanding of their business problems, their talent challenges, and their levels of maturity and sophistication in 62 different talent management processes.
This research was designed to do three things: first, gain a clear understanding of how corporate talent management is defined; second to understand the trends and directions in implementing these processes; and third, most importantly, to see how talent management drives business results. The research was extremely successful and also very enlightening. Readers who would like to get a good understanding of the findings should read the executive summary. The full 300+ page report is available at www.bersin.com/hitm or by joining our research membership program.
The most interesting, and perhaps controversial part of the research, however is the following. When we looked at the 62 different things which organizations can do to improve their talent processes (the list is available in the report), we found that there were 22 in particular which drove particularly high impact. These “top 22” as we call them represent the “priority list” for HR executives, managers, and business leaders to consider when they decide they want to “do a better job of managing and developing talent.” In other words, they tell you precisely where to focus.
When we looked at the final results, the findings were both obvious and subtle at the same time. While many books and articles have been written about the value of various HR processes, we consider this list “modern,” “unbiased,” and “scientific.” We have not applied any personal opinions to this list – it was generated from the research statistics and analysis. (For a description of the methodology, please read the executive summary.)
Fig 1: Top 22 High Impact Talent Management Processes
Here is the list. Each process is clearly described, and color coded into process areas (performance management, sourcing & recruiting, workforce planning, competency management, learning & development, and leadership development).
Let me spend some time explaining some of the startling findings here:
1. The #1 process organizations should focus on is coaching. Coaching? Is that really a talent management initiative? Yes it is. Organizations with strong coaching cultures, programs, and support structures develop much higher levels of engagement, leadership, flexibility, and performance. For more details on coaching, read our article “Coaching, a new imperative for Leadership.” This article explains why this process is so hard-hitting and what you can do to develop a better coaching program in your company.
2. Workforce planning must become far more scientific and must identify skills gaps. Skills-based workforce planning processes (#2 and #3) are critical today. Most organizations have a workforce planning function, but it often consists of little more than a collection of headcount requirements for each business unit. Organizations that succeed in today’s “tight talent” market must gain a deep understanding of their skills gaps. They must understand these gaps among the “mission-critical” jobs first, and they must have visibility into the future of these gaps. One of our research clients embarked on a 9 month study of workforce skills gaps and factored in retirements, attrition, new project demands, and known demographic shifts only to find that in order to make their business plan for the next 5 years they needed to find 45,000 new engineers. This startling finding led them to a whole series of initiatives to change their sourcing, internal career development, and job placement strategies – including moving job to people and not vice-versa.
3. Competency management is now fundamental. While we do not recommend that organizations try to build enterprise-wide models up front, this research (and much of our other research) shows clearly that competency management is the “currency” for talent processes and decisions. Without a fundamental understanding of the “secret sauce” which makes your organization succeed, much of your talent decisions sit on quicksand. Well-defined competencies help you set goals, appraise people, identify high-potentials, create development plans, identify leaders, and develop the leadership pipeline. Seven of the top 22 processes fell into this area.
4. Performance management is a heavy hitter. But high-impact performance management is not what you think. While annual appraisals are important, they are far less important than coaching, goal-setting, goal alignment, and development planning. In fact, performance appraisal and linkage to compensation is less important than coaching, goal-setting, and development planning. Our research clearly shows the following: performance management is “management.” It takes place every day, not once or twice a year. It describes the way that individuals interact with their immediate managers, their executives, and their work teams. The appraisal is no more than a single point in this wide continuum of activities. By the way, most mature organizations realize a simple fact: all we really have in business is management. Your company is not successful because of its products – it is successful because of its people. How they are managed is the backbone of success.
5. Sourcing and recruiting is becoming a science. In today’s labor market it is harder and harder to meet hiring targets. We estimate that over the next 15 years there will be more than 10 million jobs available than there are ready skilled people. This means several things: you have to do a far better job of targeting, sourcing, assessing, recruiting, and marketing to the right candidates. Recruiting has moved from a “purchasing” function to a “sales and marketing” function. Moreover, there are a wide variety of new tools now available to improve the efficiency and effectiveness of talent acquisition: exciting new assessment systems, fine-grained job boards and sourcing sites, innovative university recruiting programs, and new competitive intelligence approaches. In addition, the days of “career development” programs are back. Organizations must now invest in training and development programs which take the “unrefined new hires” and move them into key positions throughout their career. Most of the learning & development managers we speak with are rebuilding a wide variety of “talent development” programs to develop engineers, sales people, manufacturing managers, and executives.
6. Finally, a surprising fact. HR systems, for all their excitement, don’t add as much value as people think. In fact, in our ranked list of 62 processes which drive impact. HR systems ranked in the mid 50s. There are more than 50 more valuable things to focus on than the selection and implementation of an “applicant tracking system” or a “talent management suite.” This is not to say that automation is not important – it is. But take it for what it is – automation. HR systems do not “create processes” – they automate processes which you must design. A few interesting facts: organizations that have automated performance management software are 14% more effective than those with paper processes. But organizations with in-house developed systems are 9% more effective than those with vendor solutions. Vendor software, then, actually reduces overall impact for the first 2-3 years. Only after 2.4 years do vendor solutions “catch up” to internally developed systems.
What this illustrates is that software systems which automate well-designed, well-implemented processes (typically home-grown systems) add value. Software systems which automate non-existing processes or poorly defined processes simply create overhead. Do not fall into the trap of thinking that your talent management “strategy” is centered around buying software. Your strategy should focus on implementing business-driven, carefully governed processes which focus in the 22 areas above.
Each of these 22 processes takes years to implement. They require a close alignment with business managers. They require careful investments in training and change management. Software may facilitate these processes, but it does not create them. Do not let the next big wave of software vendors convince you otherwise.
Bottom line: we have clearly entered a “third wave” of HR – a time when HR can add strategic value by focusing on high-value roles, solving business-specific talent problems, and helping the organization adjust to the changing workforce.
Fig 2: The Third Wave of HR
Focus your time on three things: First, focus on the processes and people that matter to the business. Find the 30% of your workforce which generates 70% of your organization’s value and spend your time there. Second, work with your business leaders to design and implement processes that drive impact, with a careful focus on change management, governance, and monitoring and maintenance. Third, automate as much as you can, but focus on automating processes which work – not using software to drive change. We believe that if you follow the guidance from this research you will find talent management to be a transformational, exciting, business-changing experience.
As always, we welcome your feedback and comments on this article.