Talent-Driven Achievement

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What do the companies in the Fortune’s 2005 “Best Companies to Work For” have in common? According to Deloitte Consulting, which tracked the shareholder returns of 56 publicly traded firms on the list, employers on this list not only consistently beat the S&P 500, but walloped it.

These companies have more in common than their achievement and financial success. They have a solid understanding of what is happening with the talent pool, what motivates whom and what it takes to focus all of their resources on achievement of their company’s strategy and goals. They understand that the talent management that creates positive results is not a program or a one-time fix. It is a systemic and integrated method for acquiring, engaging and managing the talent that continually achieves the highest levels of customer satisfaction and financial achievement for the company.
Some factors can heavily impact a company’s ability to achieve double-digit growth and strong profitability:

* Twenty percent of senior executives in the United States qualify to retire today.

* A recent survey of large U.S. companies indicates that they will lose 50 percent of current senior management by 2010.

* Seventy percent of U.S. companies surveyed said they lack appropriate leadership bench strength.

* Employment statistics and reports by the Bureau of Labor Statistics are showing job growth; baby boomers are beginning to retire in large numbers with insufficient numbers to replace them.

* Average U.S. turnover rate is 14.7 percent. Costs for replacement range from 30 percent of salary for hourly workers to 150 percent or more for senior-level individuals.

* The Corporate Leadership Council’s recent survey results show that only 11 percent of employees are fully engaged in the company’s work; 76 percent are “agnostic” disengaged or fully engaged; 13 percent are disengaged.

Because engagement levels drive discretionary effort and intent to stay, these numbers speak volumes. The CLC study further found:

* For every 10 percent improvement in an employee’s commitment, the employee will realize a 6 percent improvement in discretionary effort, which in turn results in a 2 percent improvement in their performance.

* For every 10 percent improvement in an employee’s commitment, the employee’s probability of departure decreases by 9 percent.

* From a company perspective, moving people from disengagement to strong engagement results in up to a 57 percent increase in effort and performance.

* Moving people from low- to high-effort levels results in a company performance improvement of up to 20 percent or more.

In order for a company to build and maintain the talent and environment it needs to achieve its customer satisfaction and profitability targets, an integrated system must be created and maintained to address the questions the data above begs.
Companies that continually achieve high levels of profitability and growth such as those listed in Fortune’s 100 “Best Companies to Work For” know the intrinsic value of fully developing and managing their company’s talent resources. They are dedicated from the board on down to exceptional management of their talent, and they do so in a systemic manner focusing on:

* Identifying what level of talent is desired and ensuring they reach and maintain that level.

* Building a culture that creates the highest level of employee engagement, leading to an achievement-focused workforce.

* Building bench strength for company leadership.

* Connecting company strategy with individual goals and results.

* Developing a workforce that enables the company to have the right resources in place, where and when they are needed.

* Recognizing and rewarding all individuals at an appropriate level based on contribution and achievement.

* Communicating in a method that keeps everyone focused and engaged on achievement.

* Recognizing employees’ uniqueness, encouraging contribution and addressing their personal needs.

The bottom line for companies in today’s highly competitive world is that managing their most critical resource takes a fully integrated method, not a program. Talent management is not just a passing fad. It is a major factor for achievement of profitability and company success. How you approach talent management makes an impact on your workforce and your company results.

Sue Koch is a managing director and heads the Human Resource Consulting Practice of DolmatConnell & Partners Inc., an executive compensation consulting practice, based in Waltham, Mass. Jack Dolmat-Connell is president of DolmatConnell & Partners. They can be reached at skoch@wpsmag.com.