Talent Management | HR Managers

ADP Research Institute®

Talent Management Disconnect: Survey Shows HR Perceptions and Realities Don’t Always Align

This insight is from: "Talent Management 2011: Perceptions and Realities"

Nearly every company practices some form of talent management — whether it’s a loose policy backed up by paper or an integrated strategy supported by a fully automated system. But do HR managers believe they’re doing a good job in all areas of talent management, including talent acquisition, performance management, employee training and development (including elearning), succession planning, and compensation management? Our recent survey asked HR managers at 600 companies with 500 or more employees to judge how well they are addressing talent management compared to their peers and to respond to questions regarding the effectiveness of their talent management strategies and performance metrics. The seemingly contradictory findings suggest a disconnect between HR managers’ perceptions and the realities of their talent management practices.

HR Managers Believe Their Talent Management Maturity Is Top Notch

HR managers were asked to rate their organization’s overall talent management maturity, which we defined as having strategic objectives for the five pillars of talent acquisition, performance management, employee training and development, succession planning, and compensation management. Seventy five percent of HR managers in companies with 500 or more employees think that their companies are on par with or better than their peers and half of those in companies with 5,000 or more employees believe they are either ahead of their peers or best in class. However, when asked about the talent management strategies and performance metrics they have in place to support these high opinions, respondents often rate themselves lower. Without effective strategies and KPIs (key performance indicators), how they can really know how their talent management stacks up against that of their peers?

Organizations Use Talent Management KPIs, But Question Their Effectiveness

Virtually all enterprises surveyed use KPIs in at least one of the five talent management areas. They are most likely to use KPIs in the areas of employee training and development, performance management, and compensation management. While almost all companies in the study use performance metrics, no more than a third of HR managers rates their use of KPIs as best in class or ahead of industry peers. Most say they’re on par with or behind other companies in their industry. These findings indicate opportunities for improvement in companies’ use of performance metrics for measuring talent management effectiveness.

Formal Talent Management Strategies Are Often Incomplete, Unaligned, or Non-Existent

Just under half of the companies surveyed don’t have a formal, strategic talent management plan in place. Of those that do, only 38 percent say their strategies address all five areas of talent management and only 12 percent say their strategies are completely aligned with overall business objectives. Given these findings, one is left to wonder how 75 percent of survey respondents rate themselves on par with or above their peers in overall talent management maturity.

Most HR Managers Think Their KPIs Are Insufficient for Measuring Progress On Strategic Talent Goals

Only a third of HR managers in enterprises that have a talent management strategy and use talent management performance metrics think their KPIs are very effective in measuring progress toward strategic talent goals. Fewer than half of enterprises that employ talent management performance metrics use KPIs that address more than one talent management area. Furthermore, only a quarter of HR managers in enterprises that use talent management KPIs believe these metrics effectively measure: 1) HR’s impact on and achieving corporate goals; or 2) return on talent management investments. Since most HR managers appear to lack confidence in their KPIs, we wonder how they can have a comprehensive understanding of the state of talent management within their organizations.

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Talent Management 2011:
Perceptions and Realities

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Talent Management KPI Benchmarking and Pay-for-Performance Are Not Prevalent Practices

Fewer than half of enterprises that use talent management KPIs benchmark those KPIs against those of comparable companies. If companies aren’t comparing their KPIs with those of their peers, they can really only guess about how they stack up in terms of talent management maturity and effectiveness. Our survey findings also revealed that only half of companies that identify and track high potential employees actually reward those individuals based on their contributions. These results suggest that pay-for-performance has yet to become a widespread talent management practice.

Talent Management Perceptions and Realities Summary

Even though many HR managers may believe they are excelling at talent management, our survey findings indicate a lack of standards for measuring complete talent management effectiveness and a prevalent inability to assess the impact of talent management on achievement of corporate goals. Until organizations gain greater visibility into their talent management processes, they will struggle with measuring their own progress in this important HR function and determining how they compare to their peers.

*A complete list of sources and citations can be found in the full report.

About This Report: Report data and conclusions are based on a survey conducted by the ADP Research Institute, a specialized group within ADP that provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends and workforce strategy. See full report for details on research methodology.

Keywords: Talent Management

Business Types: Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

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