Category Archives: Talent

The Talent Series VIII: Talent Acquisition Strategies

Back in June, Aberdeen Group released The “Talent Acquisition Strategies” Benchmark Report: Sourcing and Assessing the Best of the Best that address the criticality of investing in a talent acquisition strategy as a way to identify, attract, and engage high performers given that today’s organizations are facing a market with not enough qualified employees to fill necessary job roles, i.e. The Talent Crunch.

According to Aberdeen, talent acquisition involves the planning, sourcing, assessing, hiring and on-boarding of top talent. Sourcing candidates is a way to identify and attract qualified individuals whether they are actively looking or not and assessment involves the skills tests and behavioral assessments necessary to evaluate the ability of the candidate in a given role.

As usual, Aberdeen found that there is a sharp distinction between best performing companies who are tackling the talent crunch and average players who have done little more than adopt a talent mindset. Best performing companies distinguish themselves by leveraging technology to manage the sourcing, assessment, and hiring process and creating long-term strategic plans for talent acquisition that:

  • improve their corporate brand
  • create a pool of qualified candidates
  • improve their strategic workforce planning
  • utilize technology

As proof that a talent acquisition strategy works, Aberdeen offers us the following statistic: 59% of high performing companies have increased their overall workforce performance after implementation of a talent acquisition strategy compared to 41% of industry average and 33% of laggard companies.

The report found that Job Boards and Employment Websites are number one – with companies spending over 80% of their talent acquisition budget on job boards and company employment websites (according to the “Enterprise Talent Management” study), which is probably due to the fact that job boards have an increase in the quality of hire (48%), a decrease in the cost per hire (38%), and time per hire (44%).

Furthermore, the report found that 90% of Best in Class companies have aligned talent acquisition to their company’s overall strategic plan. Furthermore, best-in-class companies have a yearly hiring management plan that covers all hiring levels and includes contingent plans for unanticipated hiring needs.

The Aberdeen report offers the following recommendations for action:

  • align talent acquisition strategy with the overall corporate strategic plan
  • measure workforce performance based on quality of hire over cost per hire and time per hire
  • recognize that “one size does not fit all”: what works for talent acquisition in one company might not work for every company
  • eliminate paper and spreadsheet based processes and use technology solutions
  • focus on a long-term plan for talent acquisition
  • manage the whole workforce

These are all good recommendations, but you should also note the following:

  • job boards and employment sites are great, but with their increasing popularity you need to remember that the same candidates they deliver to you will also be delivered to dozens of your peers, so make sure you have a compelling brand to fall back on
  • your best channel will always be referrals from your own top employees, make sure to track each and every one – even if a candidate referred to you is not available now, or not the right candidate for the position you need to fill today, it does not mean that she will not be available tomorrow or the best fit for the next position that opens up
  • metrics are good, but positions filled with highly capable individuals are better – and it’s really hard to measure “quality” (on the other hand, productivity is often more easily captured if you make a product or bill a service)
  • although spreadsheets are not the best solution, don’t throw away Excel just yet – a good product will integrate with Excel and save your staff from having to learn a new interface (and save you training time and dollars)
  • one size may not fit all, but that doesn’t mean you shouldn’t at least explore ideas that have worked for other firms – sometimes only a few small tweaks are required

The Talent Series VII: The Spend Management Talent Game

In his series of posts on The Spend Management Talent Game (Part I* , Part II*, and Part III*) over on Spend Matters, Jason Busch discussed some of the issues that affect an organizations suffering from a talent shortage and offered some advice for identifying talent.

Organizations that lack the necessary talent to compete at the top level in today’s environment often are able to identify results, but have a hard time translating paper-based savings from screen-shot trophies to those that drop to the bottom line. And as we know, opportunities and well negotiated contracts alone do not generate savings, a good follow-through led by a skilled individual is required. And, more significantly, Organizations suffering from talent deficiencies place too much emphasis on checking boxes for boxes sake. As Jason points out, your tools should not drive your processes, your holistic strategic sourcing model compliant with your overall supply chain model should.

So what kind of talent do you need to transform your ogranization from a reactionary technology-driven tactically-focussed organization to a proactive strategic sourcing organization? According to Jason, you should focus on talent with generalist skill sets, raw intellect and EQ (emotional intelligence) over industry and domain knowledge in new hires. It’s essential that they have general problem solving skills that go beyond functional — or even technology — knowledge. According to Jason, a database whiz that can fly through twenty thousand data cells is certainly valuable, but those sets of skills can be taught.

Jason also points out that this talent will need new approaches — and new skills — to thrive in the current market. Gone are the days where you can save money simply by hammering your suppliers, using reverse auctions when market conditions change, and/or passing your increased costs onto your customers. It’s an open market – the best suppliers will go elsewhere, reverse auctions only work, at most, a few times, and customers expect commodity prices to drop, not increase. Today’s procurement professionals need to be able to hedge commodity prices in the supply chain through exchange traded instruments and aggregate and understand commodity risk exposure across operating units to forward buy commodity contracts for strategic suppliers to ensure rupply and reduce maximum risk exposure.

So where do you find this talent?

One option is to look externally – consultants, contractors, and outsourcers. However, in this case, one of the keys to great results becomes management. In Part III, Jason offers some advice. If you are using an outsourcer, look for one that will balance fixed fee and contingency pricing. If they are willing to take a bit of risk, you know they are confident that they can achieve the expected results.

Be sure to understand market pricing and when it makes sense to pay top dollor. For example, Jason indicates that sometimes it really does make sense to pay thousands of dollars per day – in some cases, above the market – for true experts in targetted processes or specific categories as they amount you pay will pale in comparison to the value and savings they can generate for you. After all, a couple of extra points on a nine figure category is very, very significant.

Furthermore, bigger is not always better. Many boutique consultancies (such as Aptium Global) can bring true expertise and analytical skills – and even top tier academic qualifications – for less than the cost of a “first tier” strategy and operational firms, and with significantly less chance of generalist MBAs with little spend or supply management experience being assigned to your project.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Do you need a Chief Strategy Management Officer?

Perusing the CFO Research Services site, I came across the “Corporate Performance Management: How Committed Leaders Drive Results” Report, consisting of conclusions papers from the CFO executive conference held earlier this year in New York, New York.

The second mini-paper in the report was Aligning the finance function to strategy execution based on a presentation by Robert Kaplan, co-developer of the balanced scorecard and a Professor at Harvard Business School. In this presentation, Robert Kaplan discussed various approaches for aligning the finance function more strategically with the goals of business units and corporate leaders, including:

  • the use of balanced scorecards as a shared framework to run the business, guide the operating agenda, and evaluate progress against strategy;
  • the use of activity-based budgeting to link the strategic planning capability of Balanced Scorecards with the operational budgeting mechanism of a time-driven ABC (activity-based costing) model; and
  • Establishing a new Office of Strategy Management to help execute strategy more effectively.

These are all fantastic recommendations, after all, scorecarding is something I recommend you use in your sourcing organization as it is one of the few mechanisms for addressing operations as a whole, activity-based budgeting makes more sense to me than silo-based budgeting since most activities today cut across traditional organizational boundaries, and the key to the development of a first-class supply chain is a good strategy.

My question is whether or not you really need an Office of Strategy Management and a Chief Strategy Management Officer. I whole-heartedly agree on the paramount importance of good business strategy and the need to elevate strategy at the senior executive level, definately agree that you should have a strategy team, and see the importance of good execution and communication of strategy throughout the organization, but am curious as to why this function cannot be appropriately handled by the CEO, CFO, COO, CPO, and CCO. (Chief Executive Officer, Chief Finance Officer, Chief Operations Officer, Chief Procurement Officer, and Chief Communications Officer.)

According to the mini-paper, Kaplan advocates the adoption of a new two-to-six person Office of Strategy Management to be led by a Chief Strategy Management Officer (CSMO). This CSMO would ideally report to the CEO or COO but could also report to the CFO, especially at companies where the planning chief already reports to the CFO. The CSMO’s job would be to formulate and communicate strategy and to oversee its execution. He would help breach silos by coordinating strategy across functions. He would make sure that all business and support groups were aligned with the enterprise strategy and that strategy remained a high management and board priority.

I don’t know about you, but this sounds like a CPO role description to me. After all, with procurement about to become the center of tomorrow’s organization (as per my e-Sourcing Forum [WayBackMachine] Purchasing Innovation series, including my post on “Sourcing the New Organization”), it is going to be the CPO’s job to breach silos, align business groups, and lead strategic initiatives on a daily basis. Thus, I believe that strategy should be led by the CPO, with appropriate input and support from the rest of the CXO team, especially the CCO who will need to help communicate the corporate strategies to the rest of the organization.

But the role of executive leadership is critical to sustain the focus in people’s busy lives, Robert Kaplan is not just any bloke, I was not fortunate enought to attend the talk and had to settle for the summary, and this topic certainly deserves some very deep thought. Strategy is critical. Maybe you need a separate unit and a new CXO, maybe the CPO can handle it appropriately backed by the rest of the executive team, and maybe you need a strategy coordinator that reports to the COO or CPO. It’s a tough question. Anyone have any additional thoughts or comments on the matter? Any fellow bloggers want to chime in?

Are you getting what you’re worth?

Tim Minahan of Supply Excellence [WayBackMachine] offered us a great post on “How to Assess Your Net Worth” back in June IF you were a purchaser in the US, leaving Canadian purchasers out in the cold. Fear not, as reported in this month’s Frasers/PMAC NewsLetter, the 2006 Purchasing b2b/PMAC Salary survey was recently released and here’s what the numbers say.

On average, supply chain practitioners are receiving a salary of $66,357, up 4.2% from last year; male purchasers are still earning 17% more than their female counterparts, $70,089 vs $60,119; and Alberta is the best place to be with an average salary of $75,418. Furthermore, the most lucrative industry is retail and wholesale trade, where purchasers pulled in an average of $81,092, followed closely by natural resources at $80,709.

Here are the average salaries, by job title, for the last three years.

Title 2006 2005 2004
VP Dir Net $90,700 $84,250 $78,158
VP Dir Purch $87,118 $80,068 $75,182
VP Supply Mgmt $104,000 $99,000 $84,000
Chf. Dir Supply Mgmnt $96,750 $91,000 $84,500
Dir Mtrls Mgmnt $85,000 $79,000 $76,000
Mtrls Mgr $88,778 $91,967 $85,328
Purch Mgr $71,465 $66,728 $62,108
Purch Agent $52,218 $48,428 $45,415
Sr Buyer $58,779 $56,583 $54,951
Other Buyer $48,617 $46,800 $44,718
Other $66,162 $66,600 $65,215

The full report is available. How do we stack up to the US, the average buyer makes more $66 vs. $62 (adjusted to Canadian based on the average of the ISM and Purchasing Magazine surveys), the average Director makes less $91 vs. $120, and the average VP makes significantly less $94 vs. $160. This is bad news for Canada, already number two in the world in the talent crunch with 76 million baby boomers in the US eligible for retirement in the next five years, since you know the US compensation for supply chain leaders is only going to increase, making it even more unattractive for those leaders to stay in Canada when south of the border starts paying not 33% to 70% more, but 50% to 100% more.

The only thing on a Canadian company’s side right now is that it’s more profitable for a purchaser to start his or her career and gain valuable experience in Canada. So my message to corporate leaders is this: make an effort to slowly increase your pay scales to match US rates for senior professionals and keep our talent here – and over the next decade we can show the US how efficient operations are done Canadian style.

The Talent Series VI: The Impending Crunch

THESE are heady days for most companies. Profits are up. Capital is footloose and fancy-free. Trade unions are getting weaker. India and China are adding billions of new cheap workers and consumers to the world economy. This week the Dow Jones Industrial Average hit a new high.

But talk to bosses and you discover a gnawing worry—about the supply of talent. “Talent” is one of those irritating words that has been hijacked by management gurus. It used to mean innate ability, but in modern business it has become a synonym for brainpower (both natural and trained) and especially the ability to think creatively. That may sound waffly; but look around the business world and two things stand out: the modern economy places an enormous premium on brainpower; and there is not enough to go round.

So starts the well-written article The Search for Talent (subscription required) in a recent issue of the Economist. You know that talent acquisition is a real issue when even the economist starts harping about it!

According to the article, companies of all sorts are taking longer to fill jobs — and, according to a survey quoted therein, many companies say they are having to make do with sub-standard employees! In addition, they say there is evidence that the talent shortage is about to get worse! In addition, the proportion of American workers doing jobs that call for complex skills has grown three times as fast as employment in general. Moreover, as other economies move in the same direction, the global demand is rising quickly! For example, where are our best construction engineers? I’d bet some of them are in Dubai working on the Dubai Mega Islands project while tens of thousands more are probably scattered on engineering projects the world over! After all, the talent crunch is worse in some countries, with Mexico, Canada, and Japan leading the pack. And when you consider that by 2025, the number of people aged 15-64 is projected to fall by 7% in Germany, 9% in Italy and 14% in Japan, talent these days truly has global opportunity.

Not to say the talent crunch isn’t bad at home … with the baby-boomers preparing to retire, some estimates predict that half the top people at America’s 500 leading companies will go in the next five years! Ouch! And the Economist is not the only publication to point out this fact in recent times, an article in last month’s Inside Supply Management, entitled “The Greying Supply Chain” notes that 76 million baby boomers in the United States will soon be eligible for retirement!

And it’s going to be just as hard to replace our leaders as it is replacing everyone else. After all, with all of the downsizing, outsourcing, and rightsizing crazes of the eighties and nineties, employee loyalty is a distant memory for many employers who will continue to lose current and potential employees to the highest bidder. (There’s something to be said for putting your employees before your stock price!)

So what can you do? First of all, you can prepare to open your checkbook. Talent is not cheap … but when you consider the ROI on a talented employee vs. a sub-par employee, it’s not as expensive as you think … especially when a talented supply chain professional can save your firm millions upon millions of dollars with just one brilliant idea. How do you attract talent? Although my last post was a bit lengthy on the topic, the answer is simple. Really simple. Be a Great Place to Work!

The truth is … talent is attracted to talent, and great places to work attract talent. This starts with an innovative culture focused on success and the people who enable it. One where employees are empowered and encouraged to try new things, even if they fail once in a while. We often learn more from our mistakes than our successes, and a failure in a small controlled experience is often worth more than a major success. (Read my earlier posts on innovation here and on eSourcing Forum.)

What can you do to prepare for the impending crunch that will result from your retiring workforce? The ISM article provides some good tips.

  • Make sure you understand the demographics of your supply chain organization.
    Who’s nearing (early) retirement? What do they do? And, more importantly what do they know?
  • Put plans in place to preserve your most critical institutional knowledge before it walks out the door!
    Your employees, and the knowledge in their heads, is your most critical asset. Give them time to document it, buy systems to help them document it, and make sure those systems are accessible by all employees.
  • If you haven’t already, put alternative work arrangement programs in place.
    Can your employees work part time? Remotely? On a project basis? Not all employees may want to go from 60 to 0 right away – you need to be prepared to take advantage of those who want to phase into retirement slowly.
  • Work on an open organizational culture that accepts and respects everyone.
    You need the knowledge of the seasoned veterans, the education of the new graduates, and the raw skills of the experienced individuals in between. Everyone should feel wanted – and needed – and each individual should be able to contribute on her or his strengths.

In parting, the following quote from the Economist article sums up the situation nicely: Eventually, supply will rise to meet demand and the market will adjust. But, while you wait, your firm might go bust.