Generally, everyone in HR and recruiting says that they want to be more strategic. But it takes more than just using the word “strategic” to actually become strategic. As a former chief talent officer, I can assure you that most recruiting managers have not yet made the transition into becoming strategic. In fact, there’s little chance that recruiting will transition into “talent management” unless everyone completely rethinks their approach and understands how a strategic “talent” function differs from traditional recruiting. Many in recruiting use the term strategic without actually knowing it’s meaning. In business, the term means having a long-term impact on corporate goals and objectives. To the traditional recruiting function, making the strategic transition means that rather than focusing on short-term HR goals like filling reqs or setting up interviews, they must instead directly impact corporate goals like revenue growth, customer satisfaction, product development, market share or profit. These measures of success are dramatically different than most current metrics, where success is measured in recruiting terms like cost per hire and time to fill. It must become obvious to everyone that cutting the “cost of hire” by 10% in a function that costs less than .01% of all corporate expenditures cannot have any strategic impact on corporate costs. A true “talent manager” instead tries to impact the revenue side of the profit equation by focusing on the business units and jobs with the most impact. Rather than just putting “butts in chairs,” the talent function also focuses on the quality of hire, the fit (manager, team and job), retention, and forecasting future problems that impact the productivity of talent. Added Functions of Talent Management The scope of talent management is broader than recruiting because it also involves not just new hires but workforce planning, redeploying workers within the company, and “on-boarding,” or orientation. Talent management is the acquisition, retention, movement and release of workers in order to maximize the productivity of a company’s talent inventory. In addition to the traditional functions of recruiting, a talent manager also impacts:
- Internal job placement
- Large-scale redeployment within the firm
- Succession and replacement planning
- Workforce forecasts
- Releasing non-productive or surplus workers
A strategic talent manager doesn’t necessarily “own” each of the above activities, but he or she certainly coordinates with each and ensures that the entire talent pipeline is constantly supplied and being updated so that the net measurable impact on a business is an increase in workforce productivity (workforce or employee productivity is the measure of the increased output, relative to its costs, of the workforce). This might seem like an impossible goal for such a small function as recruiting. But being strategic means just that: having a large-scale impact on business goals, regardless of the size or the budget of your function. The First Step The first step in becoming strategic is to “align” or improve the connection between TM (talent management) budget and time expenditures and corporate priorities. This step is essential, because no business unit can impact a strategic goal unless it allocates the majority of its resources toward those corporate priorities. Once a talent manager realizes the need for this connection, their first step is to identify the specific corporate goals and objectives that talent management has a chance to impact. Once those corporate objectives are identified (increasing productivity is almost always one of them), the talent manager must next develop a process that ensures that the recruiting/talent management function allocates its budget and time in direct proportion to the corporation’s priorities. In other words, talent priorities and expenditures must “mirror” corporate priorities and expenditures. Unfortunately, most recruiting managers make no formal effort to coordinate their budget and time allocation with any goal (corporate or HR). This common “misalignment” is a primary reason why recruiting functions don’t become strategic. The following chart illustrates some typical “disconnects” between talent management and business priorities:
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|Talent management budget and time||Corporate priorities|
|Percentage of talent management time spent in business unit “A”: 10%||Percentage of corporate resources devoted to business unit “A”: 50%|
|Priority given to hiring, retaining, or developing customer service reps: 0||Priority given to improving and maintaining customer service: #1|
|Percentage of the talent management budget allocated to recruiting: 50%||Percentage of projects that are running behind schedule because of an inadequate supply of talent: 44%|
|Percentage of recruiting positions that are funded which remain vacant: 47%||Percentage of open positions that have been unfilled by recruiting efforts: 47%|
|Percentage of talent management budget spent on technology: 2%||Percentage of the corporate budget spent on technology: 22%|
|Percentage of the talent management budget allocated to a separate retention program: 0%||Priority given to retaining top performers in key positions: #2|
|Percentage of the talent management budget allocated to improving workforce productivity: 0%||Priority given to increasing productivity: #4|
The Second Step After aligning talent management priorities and budgets with corporate priorities, the next step is to ensure that the talent management function meets each of the essential elements for becoming strategic. When you compare and contrast strategic HR functions and non-strategic ones, you find that they both have dramatically different ways of goal setting, organizing and producing results. These 10 essential elements include:
- TM increases employee productivity. Obviously, because we are experts in people management, workforce productivity is the primary corporate goal where HR and talent management can make its biggest contribution. Increasing productivity is always one of the top corporate goals, and because it’s not uncommon for more than 50% of corporate variable costs to be spent on “people costs,” it is a high potential impact area. The goal for talent management is to hire, retain, and redeploy the most productive workers in an effort to increase the overall productivity of your workforce.
- TM impacts other business goals. Corporations have many strategic business goals, like market share, product development, revenue, and profit. So, in addition to the primary goal of increasing workforce productivity, there are additional corporate goals that TM must impact. For example, talent management can contribute to speeding up product development by hiring better quality individuals faster and by keeping vacant positions to a minimum. Talent management can also increase revenues by hiring better salespeople and increasing the retention rate of your top salespeople.
- HR uses performance culture tools. TM utilizes tools and approaches that emphasize performance. For example, key jobs and business units are identified and each receives priority attention and resources. Metrics systems are set up to continually measure both TM and every manager’s effectiveness. Reward systems are set up to incentivize and reward recruiters and managers for increased productivity.
- HR provides a competitive advantage. A talent manager cannot act in isolation. It’s essential that whatever he or she does is superior in results to the programs and processes of your direct competitors. As a result, TM develops a competitive analysis with side-by-side comparisons between “their” programs and yours. TM then adjusts resource allocation to ensure that each of your systems and programs provide your firm with a sustainable competitive advantage in each key area of talent management.
- HR makes fact-based decisions using metrics. If talent management is to have a direct impact on the business, it must act more “businesslike.” That means shifting away from the traditional recruiting approach of making intuition-based decisions and towards the corporate method of decision-making, which is known as fact-based decision-making. That means that HR and talent management must begin to make most of its decisions based on data and facts, not intuition. As a result, everyone must seek out information which tells you which TM programs have the most and least impact on workforce productivity.
- HR is proactive and future focused. Rather than being passive, talent management must aggressively seek out and identify areas within the business where it can have the most impact. Being future focused means that talent management must develop a longer-term workforce plan that includes accurate forecasts of both the supply and the demand for talent. It also means that TM must develop systems that alert or warn managers about upcoming talent management problems. It must also provide managers with effective tools to handle each of these potential situations.
- There is a coordinated effort. No part of HR can have a strategic impact working alone. The strength of talent management is that it formally ties together the traditionally disparate functions of orientation, recruiting, retention, workforce planning, and redeployment into a unified effort. This unified effort increases the likelihood of having the most productive workforce in the industry.
- HR has a global approach. Talent management, like all business units, must expand its impact beyond the U.S. borders. Strategic talent management professionals must be experts in attracting and retaining top talent in every geographic area where your organization does business. It must also play a part in planning the “offshoring” of activities, in order to take advantage of high-quality but low-cost labor areas around the world.
- HR builds a brand. Talent management cannot have a strategic impact unless it takes a long-term approach, and the most effective approach to guarantee a long-term supply of talent is internal and external brand building. TM must take responsibility for building up the company’s image as a great place to work by taking the lead in getting listed on “best places to work” lists. Then it must make your organization a “talked about” firm by building your image as a great place to work both internally and externally, so that the best talent in the world wants to work for you.
- Technology permeates everything. For any business function to be fast and global, it must utilize technology in everything it does. Talent management is no different, so it must go beyond the basic applicant tracking systems it currently uses and instead look at technology as the foundation of everything it does. Technology allows the extensive use of metrics and to provide its managers with real time information and pools.
Transitioning from traditional recruiting into talent management is admittedly a long-term effort, but still a desirable one. Meeting each of the essential characteristics listed above requires a shift of resources and focus. At the end of that long road however, rather than just filling reqs, you will be responsible for ensuring a steady supply of the “right talent” in the “right job.” The net result of this coordinated effort, will be a dramatic increase in workforce productivity, corporate revenues and profits.