Talent management initiatives often struggle to show how important they are for the success of their company as measured by stock value. The simple reason is that they impact so many intangibles that it is difficult to show an incontestable causation. And we are not going to claim this here either.

However, we came up with a simple idea. As acknowledged in the industry, Taleo customers are as the most progressive in talent management. So we had to see if there was an impact overall in their stock performance when compared to a benchmark.

So we compiled an index comparing the companies using Taleo versus the Standard & Poor’s 500 to see if the obvious would be revealed. Here we see a widening gap between the performance of large companies that invest in people through talent management and those that do not. Therefore, we can say that talent drives superior performance.

This approach is barely new as some investment firms put it a step further and invest only in companies that invest in their people!

Here is what Lisa Rowan, Analyst and Program Manager at IDC had to say about our last study when we found Taleo client stock prices outperformed the S&P 500 by 49 percent in 2004:
“Large organizations have tremendous opportunities to increase performance through talent management initiatives. It is interesting to see the results as those in the S&P 500 – Taleo customer comparison. These findings support IDC’s research indicating that talent is emerging as a key differentiator in today’s knowledge economy.”

It has been over two years since we published our report and recommendations on quality of hire. More than ever, it has become a hot topic. If you want to see how AstraZeneca (a $24B company with 65,000 employees) put quality of hire into action, come and listen to this webcast Thursday, May 4 at 9:30 a.m. ET or 2:30 p.m. London time (GMT).

Presented by People Management magazine, this webcast will feature myself co-presenting on the topic: “Is Talent Management the future of HR?” with Tim Wood, from AstraZeneca based in the UK. The discussion will be broader than just quality of hire, but having glanced at a preview of what Tim will present, you’ll see a great example of how HR is moving away from simple efficiencies towards real measures of effectiveness!

Register now at: http://www.peoplemanagement-taleo.com

We are often asked to explain the difference between Talent Management and HR.
If we look at history, the Personnel Department changed its name at the end of the 1980s or the beginning of the 1990s and became the Human Resource Department.

What we are experiencing today is very different. We are seeing a division at the core of the human resource function. One side is becoming the transactional expert and getting more and more outsourced to efficiency houses that can run payroll like nobody else.
The other side is becoming a strategic function where it is often seen as too important to outsource and where HR consulting firms are charging big fees.

The true obstacle for people like us that truly believe in Talent Management and its multiplying effect is that it’s possible to run a company with a limited investment in Talent Management. That’s what companies managed by accountants do. We’ve heard people say in this case, “They know the price of everything, but the value of nothing.”

But it is also the way you get a lot less value out of your talent. In fact, in an economy that is becoming increasingly service oriented, it is a recipe for failure. Now you can show the numbers people some numbers. We will show you in our next posting what the market capitalization of Taleo customers has done compared to the S&P 500 after paying attention to Talent Management.

A study from Veritude presented an interesting contradiction for us. As you can see on the chart below, HR is close to last on the strategic value for an organization, but customer service is #1.

This shows again the confusion between Talent Management and transactional HR. Of course printing a check is important as is making sure that the administrative system is working well, but that is not the same as having effective talent management in place.

We see Talent Management directly impacting customer service and consequently should rank much higher in importance. Indeed, customer service is defined as: “the provision of labor and other resources, for the purpose of increasing the value that buyers receive from their purchases and from the processes leading up to the purchase.” And that article also highlights the importance that outstanding service organizations put on training and recruiting.

So our conclusion is that if HR is close to last, talent management is close to first!

For those in your organization who might be skeptical of the software as a service (SaaS) delivery model, tell them to read this recent Business Week article by Jeff Kaplan.

Read how the managing director for THINKstrategies consulting lists and debunks the eight Saas myths. Pay special attention to Myth #5. As you can see, smart companies in the market know that you can get more than CRM delivered by SaaS and are taking advantage of the time, effort, and cost savings!

We were amused by an AFP note describing the many creative ways that Indian operations are using to find new employees.

The first one was to modify the Speed Dating concept into the job fair market. In other words, you are interviewing and sometimes even extending offers on the spot!
We often suggested that Taleo users ask their candidates to apply on the spot using Taleo’s automated prescreening system. You can select who could be interviewed onsite in order to take advantage of the momentum in this unique face to face interaction! Imagine the motivation of a newly hired candidate saying: “They hired me on the spot!”

The second creative way is to deploy kiosks in malls or book stores in order to capture young programmers. That’s not too far from the party hiring practices in the San Francisco Bay Area region here during the dot-com boom. You could see job ads in movies theatres or career booths at garden shows in efforts to target the right demographics. The difference is probably a couple of years of technology improvements. Recruiters today can expect to not only reach people, but also capture their info in the same transaction!

The next war for talent announces many new creative ways to reach your targeted audience! Email us if you have the most unusual way to do it!

We read this interesting article from Forbes: Get me Personnel! Who's got the hottest job in China? The HR guy
As described in the article and seen in the experiences of many Taleo customers, China is a new growing environment. Consequently, wages in China for top HR executives of multinational companies grew 20% in each of the last two years.

The key driver according to Forbes is the cost of bad hires, especially those linked to intellectual property (IP) loss and fraud. So if you have not read Taleo Research’s latest report on background checking, you will see that it’s not only in China that we should be worried (see below)!

An updated FAQ on the new OFCCP ruling just came out.

The specific Q & A that got our attention was:

“Does a contractor "consider" an individual merely by running a (basic qualifications) search that brings up the individual's resume, if the contractor never opens the resume?
If the contractor does not open the resume as a result of appropriate data management techniques that limit the number of resume "hits" that are reviewed, then the contractor has not "considered" that individual.”

This brings us to the new definition of a resume in the electronic world. For years, we have pushed the concept that a resume or any document of unstructured information is very hard to capture, work with, and automate. So consequently, the most advanced systems like Taleo include the resume, but also way more structured data that brings the power of the matching system to a new level. It is often possible to pre-screen without opening a resume.

We won’t speculate on how this can or cannot change the ruling, but a structured competency approach is certainly less inclined to generate mistakes and should align talent management closer to the original purpose of the OFCCP rule of non-discrimination.

We were pleased to see the Saratoga April Newsletter emphasize the hidden cost of HR, especially in the staffing function in their Metric of the Month: Indirect HR.

They illustrated the point using an example of two companies in comparison. The first company has a ratio of one HR person for 120 employees and HR cost per employee of $1,200. The second has a ratio of 180 and spends $1,000 per employee.

You may think that the second employer is better off. Until you realize that all staffing costs are reassigned to the line and are not accounted for in the HR budget! We covered this topic and more in our report on ROI, but we are often surprised to see how many companies struggle to prove a 10X return because the budget is not theirs!

I hope this piece coming from Saratoga (now part of PriceWaterhouseCoopers and an entity close to the heart of many CFOs) will help to convince them.

We reviewed with interest the data provided by the CEO briefing from the Economist Intelligence Unit. This was truly a comprehensive global survey with 555 executives representing 68 countries. And two-thirds were C-level executives or board members.

Contained are both good and bad news for talent management and HR. The bad news is that they rated HR as the lowest performing business area. We can argue the issue as we want, but that is the fact.

The good news is that out of the 12 operational priorities listed, Better Talent Management Practices (using phrases like “Better recruitment, development and management of employees”) came in the top 4. Talent practices finished ahead of research & development, financial systems, supply chain, partner & supplier relationships, back office systems, and production improvement. And also way ahead of internal control and risk management.

For all of us who think in gap analysis, such as what is the most important and has the least performance should come first, we see Talent Management being #1!

“After 30 years of training, I am increasingly convinced that hiring is more important than training”
Stephen R. Covey, Author of The Seven Habits of Highly Effective People