Chief executives do not trust HR to manage their talent

2006

As the West's workforce demographic changes, managing and retaining senior level talent is becoming an ever more important priority for CEOs. But they don't trust HR and personnel to get it right.

The Towers Perrin survey of senior HR executives in North America found more and more companies were now recognising the importance of retaining talent in a demographically challenged environment.

Increasingly, too, they were focusing on a core group of leaders, technical experts and key contributors who could drive their business forward rather than thinking of "talent" in terms of the whole workforce.

But there was a gap between what HR felt – that talent retention and development was one of their most critical objectives – and what the business felt HR could achieve.

Few CEOs, it emerged, believed their HR departments had the skills needed to manage this emerging talent pool effectively.

Groups now considered to be "talent" included senior leadership, employees at mid-level with leadership potential, key contributors or technical experts and entry-level employees with leadership potential.

Together, these defined talent pools made up, on average, no more than 15 per cent of the total workforce, said Towers Perrin.

"As businesses transform to drive top-line growth, we're seeing talent emerge as a top strategic priority for CEOs and boards, as well as HR executives," said Max Caldwell, a Towers Perrin principal and one of the leaders of the firm's HR services business workforce effectiveness practice.

"Creating a robust 'talent supply chain' that delivers the required number of leaders and key contributors who possess the right mind-set and skills has never been more important," he added.

"However, the HR function in many organisations is not yet delivering sufficient value in this critical area," he warned.

Organisations were distinguishing between talent management as a set of practices and programmes for a relatively small, if critical, segment, and workforce management as a set of practices and programmes covering the entire workforce.

But no more than half of 250 companies polled believed that HR had the skills across a wide range of managerial support activities needed effectively to deliver on the talent management role.

More than two-thirds said their HR department did not have the skills necessary to measure employee engagement on an ongoing basis or to evaluate the return on workforce-related investments.

The inability to capture and disseminate relevant data to managers was also problematic, since companies had no quantitative foundation from which to develop a talent management strategy and build and deploy meaningful processes.

"Many of the larger and more forward-thinking organisations are creating a special senior talent management position to focus specifically on the organisation's talent strategy," noted Caldwell.

"The titles may differ, but these roles seek to integrate things like strategic workforce planning, recruitment, leadership development and career management, which had previously operated in silos," he added.