Hiring for Critical Roles: You're Doing It Wrong

HIRINGFORCRITICALROLESYou’re Doing It Wrong

David WilkinsVP, Taleo Research@TaleoResearchBlog: talent-management-blog

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EXECUTIVE SUMMARY

› High unemployment is a myth (when hiring for critical roles)

› Skill shortages for critical roles are bad and getting worse

› “Hiring” as a default approach is mostly bad

– It costs more.

– It results in lower productivity and performance.

– It hurts engagement and turnover for hi-pos.

› We need to switch the model to development and mobility first.

› We need better talent intelligence, job definitions, and matching tools.

› But mostly we need a strategy.

POLL

› Are you having difficulty filling critical roles?

› Yes

› No

THE “HIGH UNEMPLOYMENT” MYTH

Education Level (March, 2012) Unemployment Rate

Less than high school diploma 12.9

High school diploma 8.3

Associate’s degree or some college 7.3

Bachelor’s or higher 4.2

Master’s (as of May 2011) 3.6

Doctorate’s or Professional (as of May 2011) 2.4

When it comes to critical roles, which group are you hiring from?

http://www.bls.gov/news.release/empsit.t04.htmhttp://www.bls.gov/emp/ep_chart_001.htm

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THE CHALLENGE OF CRITICAL ROLES

The R&D shortage is particularly acute in industries where product innovation is critical. Among the Technology/Media/Telecom companies surveyed, 40% predict a severe shortage of R&D talent, while 39% of Consumer/ Industrial Products companies surveyed and 37% of Life Sciences/Health Care companies surveyed foresee shortages in this area.Talent Edge 2020: Blueprints for the new normal, December 2010, Deloitte.

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THE CHALLENGE OF CRITICAL ROLES

The R&D shortage is particularly acute in industries where product innovation is critical. Among the Technology/Media/Telecom companies surveyed, 40% predict a severe shortage of R&D talent, while 39% of Consumer/ Industrial Products companies surveyed and 37% of Life Sciences/Health Care companies surveyed foresee shortages in this area.Talent Edge 2020: Blueprints for the new normal, December 2010, Deloitte.

Nearly seven in ten executives surveyed (68%) reported they have a high (39%) or very

high (29%) level of concern about retaining critical talent.

- Talent Edge 2020: Blueprints for the new normal

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OTHER PERSPECTIVES

The 2011/2012 Talent Management and Rewards Study, North America, Towers Watson

10 Hardest Roles to Fill in the US:1. Skilled Trades2. Sales Representatives3. Engineers4. Drivers5. Accounting & Finance Staff6. IT Staff7. Management/Executives8. Teachers9. Secretaries/Administrative Assistants10. Machinist/Machine OperatorTalent Shortage Survey, 2011, ManpowerGroup.

8 Hardest Roles to Fill in the UK:1. Finance and Legal Professionals2. Customer Service3. Technical and IT4. Marketing Professionals5. Sales Professionals6. Production Staff7. R&D8. AdministratorsUK Critical Talent Pipelines, 2012, Taleo

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AND THE FUTURE LOOKS WORSE

› Georgetown University Center on Education and the Workforce on shortfall of college grads in 2018

› Accenture study from 2006 showed that STEM enrollments would need to increase by between 2006-2016 to meet demand

3,000,00020-30%

Instead, enrollments have GONE DOWN.

POLL QUESTION

› How do you typically fill critical roles?

› Mostly external hires

› Mostly internal hires

› A pretty even mix of each

CHALLENGES IN HIRING EXTERNALLY FOR CRITICAL ROLES

› Cost

› Time

› Retention

› Engagement

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EXTERNAL HIRE CHALLENGES: COST AND TIME

› External hires cost more

– Critical roles are usually industry-wide, not company specific

– Thus, there is usually high demand for limited resources

– Critical roles are critical for a reason – unique skills, high need

– Scarcity + high demand = high cost

– “Unknowns” in external hiring = more focus on “observable characteristics” such as education / experience = pay

› Scarcity also often means head hunters which adds more cost

› Scarcity also means longer time to hire, adding opportunity cost

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EXTERNAL HIRE CHALLENGES: COST AND TIME

› External hires cost more

– Critical roles are usually industry-wide, not company specific

– Thus, there is usually high demand for limited resources

– Critical roles are critical for a reason – unique skills, high need

– Scarcity + high demand = high cost

– “Unknowns” in external hiring = more focus on “observable characteristics” such as education / experience = pay

› Scarcity also often means head hunters which adds more cost

› Scarcity also means longer time to hire, adding opportunity cost

How much more do external hires cost? 18-20% more according to new research by

Wharton.

“Why External Hires Get Paid More, and Perform Worse, than Internal Staff”

Knowledge@Wharton

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EXTERNAL HIRE CHALLENGES:RETENTION, PRODUCTIVITY, AND ENGAGEMENT

› External hires aren’t as productive as internal hires; new research suggests that it takes 2 years to get “up to speed”

› External hires average shorter tenures than internal hires

› External hires average lower performance reviews

› Hiring outside = risk to top performers and high potentials

– “Lack of career development” is #1 reason for dysfunctional turnover

– “Training and development opportunity” is #1 driver of employee engagement

– “More opportunities to do what I do best” is #1 driver of employee engagement

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EXTERNAL HIRE CHALLENGES:RETENTION, PRODUCTIVITY, AND ENGAGEMENT

› External hires aren’t as productive as internal hires; new research suggests that it takes 2 years to get “up to speed”

› External hires average shorter tenures than internal hires

› External hires average lower performance reviews

› Hiring outside = risk to top performers and high potentials

– “Lack of career development” is #1 reason for dysfunctional turnover

– “Training and development opportunity” is #1 driver of employee engagement

– “More opportunities to do what I do best” is #1 driver of employee engagement

Despite higher costs, external hires “get significantly lower performance evaluations

for their first two years on the job than do internal workers who are promoted into

similar jobs.”

“Why External Hires Get Paid More, and Perform Worse, than Internal Staff”

Knowledge@Wharton

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WHY DOES TALENT LEAVE?

#TaleoTalent

YET WE KNOW NEXT TO NOTHING ABOUT OUR TALENT:PERFORMANCE MANAGEMENT AND COMPENSATION

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#TaleoTalent

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#TaleoTalent

YET WE KNOW NEXT TO NOTHING ABOUT OUR TALENT:SUCCESSION AND TALENT MOBILITY

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#TaleoTalent

YET WE KNOW NEXT TO NOTHING ABOUT OUR TALENT:SUCCESSION AND TALENT MOBILITY

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We know we need to have succession plans for critical roles, but we don’t…

#TaleoTalent

YET WE KNOW NEXT TO NOTHING ABOUT OUR TALENT:TOP PERFORMER AND HI-PO DATA IS UGLY

› 80% of companies don’t know who is a flight risk.

› 78% of companies don’t know who is on a succession plan.

› 80% of companies don’t know who has a career path.

› 65% of companies don’t know much about who they’re retaining.

› 84% of companies don’t if their development plans are working.

› 65% of companies don’t know much about Hi-Po’s.

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ADDRESSING THE PROBLEM

External Hires

• Fresh eyes and perspectives

• High growth, new territories, new strategic directions

Internal Hires

• Anytime the other criteria don’t apply…

• In other words, this should be the “default” model

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YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

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YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

Job RolesCatalog Job

Requirements

#TaleoTalent

YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

Job RolesCatalog Job

Requirements

Match Potential Candidates

#TaleoTalent

YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

Job RolesCatalog Job

Requirements

Match Potential Candidates

Assess Gaps

DevelopmentPlans

Update Requirements

Green light Candidates

#TaleoTalent

YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

Job RolesCatalog Job

Requirements

Match Potential Candidates

Assess Gaps

DevelopmentPlans

Update Requirements

Green light Candidates

#TaleoTalent

YOUR DEFAULT HIRING FLOWCHART

CatalogExternal Talent

Talent ProfilesCatalog

Internal Talent

Critical Talent

Pipelines

Job RolesCatalog Job

Requirements

Match Potential Candidates

Assess Gaps

DevelopmentPlans

Update Requirements

Green light Candidates Add

#TaleoTalent

ADDRESS YOUR TALENT INTELLIGENCE GAPS

› Where are your skill and competency gaps?

› Do you have robust talent data for your team?

– Pre-hire experience, job roles

– Skills, capabilities, competencies

– Self-identified skills developed in personal life

– Career aspirations and related gaps

– Learning and development plans

– Crowd-sourced assessment of potential, capabilities, fit, etc…

– Current and automatically updated talent data

Catalog Internal Talent

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ADDRESS YOUR JOB ROLE GAPS

› Have you defined requirements for each job?

› Do you have job families?

› Can you identify potential career paths based on competencies, capabilities, experience?

› For critical roles, have you identified longer-term competency development strategies?

– Required experience and levels of mastery

– Education and formal knowledge requirements

– Bridge roles or “stepping stone” roles that provide experience

– Assessment models

Catalog Job Requirements

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DEVELOPING YOUR TALENT

› Career Aspirations

› Skill Gap Assessment

› Action Learning

› Stretch Goals and Assignments

› Talent Mobility

› Multi-stage Development and Competency Model

› Mentor / Mentee Models

DevelopmentPlans

Assess Gaps

#TaleoTalent

UPDATE REQUIREMENTS

› Is the job definition static or dynamic?

› How much “wiggle room” is there to rethink work assignments and responsibilities to overcome gaps?

› Do requirements change over time in response to changing competitive landscape, strategy, new opportunities or threats?

› Job roles and related requirements are a means to an end

– Reflection of “best” way to organize work, not the “only” way

– Often better to rethink work assignments than lose a top performer or hi-po for lack of internal opportunities

Update RequirementsAssess Gaps

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› Goal is not to “hire,” but to match talent to requirements

› Yet we don’t know the basics

MATCHING – NOT DEEP ENOUGH Match

48%75%

say that their skills go unnoticed

feel that their work history & experiences are not leveraged by their employer

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My family / partner21%

My friends outside of work4%

My colleagues and peers43%

HR software / systems 1%

My line manager22%

Don’t know5%

Other 1% None of the above

3% My family / partner43%

My friends outside of work9%

My colleagues and peers22%

HR software / systems 1%

My line manager13%

Don’t know5%

Other 1%

None of the above6%

MATCHING – NOT SOCIAL ENOUGH

› Co-workers know talent best, yet aren’t involved in matching

Match

Professional & work capabilities

Professional & work aspirations / ambitions

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MATCHING – NOT AUTOMATED ENOUGH Match

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BLEND YOUR CRITICAL TALENT PIPELINES

› Internal candidates

› External candidates

› Stop-gap contingent workers

Critical Talent

Pipelines

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WRAP UP

› High unemployment is a myth (when hiring for critical roles)

› Skill shortages for critical roles is bad and getting worse

› “Hiring” as a default approach is mostly bad

– It costs more.

– It results in lower productivity and performance.

– It hurts engagement and turnover for hi-pos.

› We need to switch the model to development and mobility first.

› We need better talent intelligence, job definitions, and matching tools.

› But mostly we need a strategy.