Viewpoint -- Tackling Talent Management

Viewpoint -- Tackling Talent Management

How the "people factor" achieves high performance for the industrial products industry.

Demand for your products is as durable as ever. But thanks to globalization you face a whole host of challenges -- just as a critical shortage of skilled labor threatens your ability to outperform the competition.

That shortage is not only a function of the ageing workforce, which is a challenge for many industries, but your industry suffers from a particular image problem with the younger generation. They just don't think it's glamorous or "high-tech" enough. What's more, they fear that your culture is rigid and "old school" and would never be able to accommodate their ambitions.

Aging Workforce -- Human Performance Transformation Approach

You know, and Accenture research confirms, that organizations that excel in developing their people also tend to be high-performance businesses that dominate their markets. Few industrial products companies achieve this level of excellence.

Most tend to under invest in identifying, developing and training their people -- even though people are the greatest assets for any institution. Many have been forced to hire back retirees in an effort to compensate for the failure to identify, acquire and build the workforce necessary to compete in today's marketplace. Overall recruiting efforts are still falling well short of plan.

That's the bad news. The good news is that the talent crisis is also an opportunity. In fact, it offers a whole host of opportunities to improve your talent management practices -- and thus make the institution stronger.

Globalization may have intensified the competition from low-cost producers -- but it has also opened doors to previously inaccessible pools of talent in Asia and elsewhere. Now is the time to abandon obsolete, piecemeal approaches to recruitment and training. By seizing the chance to develop new people development skills -- skills that will actually attract and retain the right sort of talent, new and old, and from a global pool -- you could power well ahead of the competition in the race to achieve high performance.

Our research shows that talent management success hinges on mastery of four core and inter-dependent capabilities:

  • Aligning the workforce with your business strategy
  • Attracting, developing and retaining key talent
  • Minimizing the loss of critical skills
  • Continuously challenging the enterprise

Here's how.

Aligning The Workforce With Your Business Strategy

High-performance businesses understand that workforce constraints have a huge influence on successfully executing business strategy, so they have developed an exceptionally keen understanding of their particular workforce demographics and have developed programs that are aligned with their overall goals.

By elevating human capital management to the level of a strategic function and aligning it with their overall strategic direction right across the organization, high-performance industrial products businesses are able to focus on the development and pursuit of talent throughout their global supply chain -- talent that can really complement their existing corporate gene pool and, indeed, improve it.

They clearly articulate a vision for the company's workforces and ensure that they understand their worldwide needs -- present and future -- as well as the resource pools that will serve those needs.

Consider, for example, how Woodside Energy Ltd., a leading Australian upstream energy company, integrated people management processes and tools to encourage behavior that would support the company's vision and business objectives.

Woodside's people management strategy aligned individual performance with business performance by providing opportunities for individuals to realize personal and professional growth aspirations. A flexible rewards and recognition program compensates all employees on the basis not only of their ability to achieve individual and team goals, but also according to how well their individual behaviors align with Woodside's mission, vision and values.

Attracting, Developing And Retaining Key Talent

Common Talent Management Process

1. Attracting

Attracting people with the skills and talents to improve the corporate gene pool hinges on a combination of a successful human capital strategy and superior workforce planning. This may seem obvious, but demographic change has greatly complicated the process.

Accumulated experience has become a more important determinant of an individual's career than mere advancement in the hierarchy. Today's well-educated and highly skilled young people no longer expect lifetime employment -- but they do want to be able to tailor their careers to their evolving needs and expectations. Young people favor employers who will provide them with the means to make individual decisions. And they want the chance to move sideways as well as upward in the corporate hierarchy, or to change jobs at key points in their careers.

The key to recruitment success is having and clearly articulating a "global people development" model, or philosophy, which is closely aligned with your operating model. You can start to develop that philosophy by refining your brand image to attract today's employees as well as your customers.

Companies that have been outstandingly successful in attracting the right sort of talent tend to have very strong brands indeed -- brands that are very often personified in the company's leadership. Think of General Electric, for example, and you immediately think of the charismatic Jack Welch, who considered his success in attracting the right people to GE to be his greatest single accomplishment.

Convincing younger people that you are also creative and flexible is a tougher proposition -- but some companies are broadening their appeal to the young by pro-actively targeting universities and even high schools. In Kansas City, for example, Cummins Corporation's "Dream It. Do It" program showcases the challenging nature of the company's work and manufacturing processes to individuals approaching high school graduation -- a pivotal decision-making point. The program already has raised enrolment in manufacturing-related courses at the local technical college by 35%. It also has helped the area win a $15 million federal workforce development grant.

2. Developing

Of course, individuals are still likely to shop around for better opportunities if they are not nurtured on the job. A well-defined process for developing your people means enhancing your career and succession planning programs to show recruits that you are committed to long-term success. It also means demonstrating strategic investment in career development programs.

High-performance businesses focus on developing rich content for their career development programs -- content that improves the overall capabilities of the organization. It is backed up with the expectation that learning is part of every employee's responsibility. And these foundational attributes form the basis of a consistent culture of self-improvement.

Danaher Corp.'s Business System is based on the Japanese philosophy of kaizen, or continuous improvement. It forms the basis for all training at the company, from the shop floor to senior management. Executives are expected to complete Executive Leadership training, which typically takes two years and includes seven distinct modules. Once trained, all employees are engaged in the kaizen events and policy deployment initiatives that underpin Danaher's outstanding productivity.

Leaders, moreover, don't get full credit for their performance if it has not been delivered in a way consistent with the system's values: achieving the numbers is not good enough if they were not based on the core principles, like customer focus or outstanding teamwork, that will make them sustainable. By the same token, someone who is clearly struggling to live the company's core values but not yet delivering results will be nurtured until they are successful.

Caterpillar, meanwhile, offers an unusually successful example of a corporate "university" -- most of which fail to align career development with overall corporate goals. The university relies heavily on e-learning, a cost-effective means of training globally for the company which has saved an average of $87 per person for every e-learning course taken. E-learning also allows the Caterpillar University to provide a customized learning experience -- something that younger employees find especially valuable.

3. Retaining

Because it encompasses such a wide variety of different product types and job descriptions, your industry is in a remarkably good position to offer plenty of career possibilities. But today's workforce demands stretch goals. You may have to abandon some of your old ways of doing things to optimize your employees' options, and thus maximize your chances of retaining all that talent you have so diligently nurtured.

Look for ways to make job opportunities visible across the organization, as well as investing in retraining and reassigning.

Of course, the right compensation plan is as crucial as the creation of opportunities for advancement for any high-performing employee. Whirlpool Corp. has overhauled its pay-for-performance and review system to increase the maximum bonuses for high-performing employees. It also has made a larger percentage of employees eligible for bigger bonuses. The company awards merit raises based on performance as well, but it considers bonuses both more cost effective and more motivating -- a means of breaking away from the notion of entitlement.

Increased M&A activity in a globalized environment is the key to growth for your industry and many others. But it also complicates your talent retention strategy. The evidence that executive turnover increases after a merger is overwhelming. But there's also plenty of evidence to suggest that good communication is the key to keeping top talent.

There's no surer way of losing the loyalty of a workforce than by failing to keep them informed about critical developments. Ideally, you should solicit your employees' assistance in tackling transition issues like layoffs.

That's what one vehicle manufacturer did when the challenges of globalization necessitated more aggressive growth strategies. The company has an outstanding reputation as a place to work and was keen to retain the loyalty of its workforce in difficult new circumstances. So it sought feedback from the workforce about the effectiveness of its human capital programs and on the basis of their responses took steps to enhance its human capital infrastructure with new HR information systems and transaction processes.

Minimizing The Loss Of Critical Skills

Many companies in your industry are either trying to lure valued retirees back to work or entice older workers to stay on the job longer.

In Finland, for instance, Oras Ltd., a manufacturer of faucets and valves, grants older workers more days off. Other companies try to make their jobs more pleasant and less stressful by introducing more "ergonomic" working environments. However you try to capture the knowledge that retiring Baby Boomers threaten to take with them, mentoring is an effective way of transferring that knowledge.

At International Truck and Engine Corp., a subsidiary of Navistar International, where more than half of managers are approaching 55, highly experienced workers in this age group are actively mentoring younger people to succeed them in all manner of business divisions, from parts to pensions, and at all levels of seniority. Thus, the company ensures that new employees are steeped in its philosophy and operating model.

Continuously Challenging The Enterprise

Despite all these efforts to attract, train, retain and minimize the loss of talent, the fact remains that you are coming under increasing pressure to adopt a more flexible workforce model in order to turn "fixed" cost into variable cost as it relates to the cyclical nature of most industrial companies. Re-thinking shared services and outsourcing can help.

Shared services and outsourcing -- creating world-class support functions to perform processes that are highly dependent on business cycles -- can trim operating costs as well as reallocate the time key employees spend on low-value functions. Take for example, the topic of learning.

Avaya, a spin-off of Lucent Technologies and the world's second largest supplier of voice communications system, has to introduce complex new products continually and quickly. That necessitates regularly updating the company's workforce, channel partners and customers via a highly effective e-learning function.

Globalization and competition, has accelerated this schedule of new product launches, severely straining Avaya's internal learning organization, which was fragmented across several geographies. By outsourcing its training and development function -- 1,800 plus courses for more than 50,000 people in some 90 countries -- the N.J.-based communications company has dramatically improved time to proficiency.

The Payoff

Getting talent management right requires a long-term commitment. As our research shows, aligning the workforce with your overall business strategy is just a starting point. You also need to develop systematic approaches to attracting, developing and retaining key young talent -- at the same time minimizing the loss of those critical skills that older workers possess in abundance. Moreover, only by continually challenging the enterprise will you be able to build a more flexible workforce model.

These efforts promise to pay plenty of benefits. Successful talent management is key to high performance -- the ability to deliver consistently superior returns to your shareholders across industry and economic cycles, as well as changes of leadership. Now is the time to start seeing the talent shortage as an opportunity -- and seize the chance it offers to create and nurture the sort of workforce that can outperform your competitors on every level.

Paul Loftus is the Managing Partner, Industrial Equipment practice at Accenture. Accenture is a global management consulting, technology services and outsourcing company.www.accenture.com.

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