For a long time, staffing suppliers and vendors have seen a vendor management system (VMS) as a threat. But as described in a recent article in Contingent Workforce Strategies, they are starting to see it more as an enabling tool for their customers. The most progressive suppliers are looking to integrate to the VMS in order to reduce their operational cost and hopefully gain more market share than their less proactive competitors.

Since Taleo has been a provider of a VMS solution called Taleo Contingent, it pushed Taleo Research to look at the ROI of these solutions. We published studies and have been puzzled by the lack of ownership in many large companies to this huge ROI!

The adoption growth has been slower in 2005 than before as shown below, but we believe that the recent threshold reached and supplier understanding of the value could make this market grow much faster in the future!

We were reading the Towers Perrin report recently where they were asking a very simple question: How do organizations measure success in talent management today?

Here are their answers below in percentages:

Surprisingly, we sometimes still hear that a few companies question on demand infrastructure and the software as a service (SaaS) that it delivers. If that is the case in your organization, I would send them this link to read the CIO survey by CIO Insight magazine.

Refer specifically to the question: “Where does your company stand with regard to the following new technologies?” As you can see, 31% of CIOs have already deployed a SaaS application, 14% are testing it, and 23% are making evaluations. So they are probably in the 32% that either have no interest or are unaware of the impact.

Our only question is this: why are they the exception today?

We read with great interest an article from The McKinsey Quarterly called “Strategy in an era of global giants”. Since many Taleo customers are global giants, I was positively surprised to see the high importance placed on talent management.

The key finding here is the fact that large organizations have been able to increase their net income threefold while only increasing their revenue by a factor of two between 1984 and 2004.

Some of this success is rooted in the fact that “successful mega-institutions recognize an ever more direct link between their profitability and their large professional-talent pool”.

As shown on the charts below we can see the uplift created in 2004.

We all acknowledge the value of talent. We also agree strongly with the authors stating the fact that we need a new performance metric. While they recommend profit per employee, we tend to diverge a bit and recommend operating margin over total labor spend! Let’s not forget the increase in contingent labor in the last 20 years!

For more on this important issue, see our previous posting on People Metrics That Matter and our article for Accenture: Key Metrics for Today’s Talent Economy.

The last two days in Orlando were full of unique value for all the Taleo customers that join our yearly event. It is always a good feeling to see more than 500 people so devoted to talent management congregate and exchange best practices.

Not only were many Taleo partners and Taleo experts sharing their insights, but also leading organizations such as: HP, Gap Inc., Intel, Mercer, Honeywell, JPMorgan Chase, J&J, and many others. All of them felt it was really a true privilege to be able to share talent management ideas among the best in the world!

Also it was good to see Deloitte Touche Tohmatsu rewarded by a third party jury for their incredible use of Taleo. It took the strong internal leadership of Kent Kirch to pull off their great internal mobility program worldwide.

Leadership was the topic that the conference keynotes were all about. Carly Fiorina, former CEO of HP, was an exceptionally gifted speaker who inspired our customers to lead their organizations towards new heights.

I asked Carly: “How should HR and talent management leaders present change programs to the executive suite?” She highlighted three key criteria that she was always looking for:

1. Is it relevant for the business or is it just another HR project?
2. Do you know the people in the business intimately in order to make this call?
3. Have you thought this through in detail?

Carly also discussed the value that Taleo brings to make HR become more strategic. In fact, HP was using Taleo when she was there and helped during the merger.

Yesterday morning, Ken Blanchard, the author of many books including The One-Minute Manager, was a voice of motivation towards authentic leadership. One important concept that he brought forward was that all organizations need to have clarity on their values. But more important than that was to have your values ranked in order to enable unambiguous decisions when a value conflict may arise!

In short, Taleo WORLD was two full days of many highlights. We see a bright year ahead for the hundreds of HR professionals that will return to their organizations with many fresh ideas and take talent management to a true leadership role!

Last week, I watched the documentary movie called Enron: The Smartest Guys in the Room. I think it should be a compulsory movie to watch for all MBA students and strongly recommended for anyone who works in business.

The interesting fact about Enron is that it was featured as one of the exceptional companies in the McKinsey book, The War for Talent!

Does that mean that McKinsey was another victim of the hype around a company that pulled Andersen down and put many financial institutions in an ethically questionable position?

We don’t think so. Many of the practices that they instilled were good. The problem is in the choice of the core values. We know that the key to sustain success is to have a disciplined organization based on core values. When a lack of ethical core values starts to be obbvious as portrayed in this movie, you get: electricity price and supply manipulations in California, accounting scandals, and tremendous loss of value. Let’s simplify what brought them down: greed as a core value! But being smart or talented doesn’t mean a smart guy or gal will immediately turn into a wise guy!

Values and ethical leadership are the keys to getting the most out of great talent, as opposed to talented people trying to get away with as much as they can!
At Taleo we are proud to emphasize our core values to our employees, partners, and customers:
Quality, Integrity, Passion, Humanity, Partnership, Innovation.

Several years ago, a VP of HR was telling me that their company, a member of the Fortune 500 list, was extremely bad at offering the next opportunity to its talented employees. How did he know? Exit interviews explained the issue: it was easier to find opportunities outside than inside the company!

That is exactly what McKinsey outlines in their article: “Making a market in talent”.

The paternalistic approach of the traditional succession plan should fall by the wayside and be replaced with Talent Marketplaces.

This approach is well described in the article: HR becomes a market maker!

We have in fact seen a lot of Taleo customers using many of these techniques. I invite you to read the real-world case studies at:
http://www.taleo.com/customers/case-studies.php

In conclusion, we strongly agree with the closing sentence of this article: “talent markets represent the cutting edge of resource allocation”.

We very much enjoyed the article Rethinking the Value of Talent by Jeffrey Joerres and Dominique Turcq in strategy+business.

The key idea that is very well explained here is how to think about “business critical” talent versus simple titles. This is leading savvy organizations to start thinking about talent in four general roles:

Those four roles are best explained by the authors. Here is a direct quote:
• “Creators devise and implement an organization’s distinguishing value proposition or business model. They include senior executives and the chief designer in a fashion house. These are scarce resources with skills that take a long time to acquire and are costly to develop and maintain.
• Ambassadors represent the organization’s public face and are responsible for customer experience. Among other positions, they are bank tellers, supermarket cashiers, nurses, and field installation technicians. In most cases, these workers are easily replaceable and their skills do not have to be particularly sophisticated, but if they don’t do their job well, the business can suffer significantly.
• Craft Masters ensure the quality, timeliness, and cost-effectiveness of an organization — the essential ingredients for the faultless execution of a business strategy. These are the design engineers in a high-tech business, the “nose” of a perfume brand, the whiskey blender in a distillery, and the auditor in an accounting firm.
• Drivers keep the business running. They are assembly-line operators, back-office agents, and administrative assistants. Although they are neither crucial to the success of a venture nor hard to hire, in most companies they represent the largest category of human capital, and bad management of this group can lead to operational disruption or quality problems.”

Applying these four roles will lead to a refinement in all traditional talent management metrics that will give organizations more meaningful data and less meaningless averages!