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1 The New Balance Sheet

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Information about 1 The New Balance Sheet
Career

Published on November 21, 2008

Author: frank_pacheco

Source: slideshare.net

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Human Capital <EVP> & Talent Acquisition
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Recognizing Human Capital as a Competitive Asset The New Balance Sheet By Frank Pacheco

The New Balance Sheet Human Talent as Misunderstood Capital Does Talent Make a Difference? It Makes a Difference!...Act Quickly Cost Analysis for Loosing Talent Cost Analysis for Acquiring Talent HR Strategy is Key to Business Success OVERVIEW Human Capital is the main competitive advantage of the 21st century………. …….Mergers - Acquisitions; Technical Advancements; Globalization - Emerging Markets; Demographics and the “War for talent” Let me walk you through it quickly….

Human Talent as Misunderstood Capital

Does Talent Make a Difference?

It Makes a Difference!...Act Quickly

Cost Analysis for Loosing Talent

Cost Analysis for Acquiring Talent

HR Strategy is Key to Business Success

Human Talent as Misunderstood Capital Human assets are more valuable than capital assets, but not treated the same, at times even casually……… Many companies track assets in their balance sheet, but fail to track revenue per employee and/or analyze their bottom line impact Hiring is often ad hoc, not rigorous or well designed Performance metrics should be automated and ongoing Development dollars could be ambiguous or inefficient Little effort is spent in facilitating a smooth transition from onboarding to talent management Organizations or business groups that fail to appreciate human talent as a valuable asset, will be plagued by: Weak earnings Loss of market share Financial uncertainty Unable to service growing markets Unable to retain good leadership Unable to service internal clients Name Branding suffers and top talent will avoid such companies, causing: Lowering of hiring standards Retaining low performing employees Promoting un-qualified personnel Condoning nepotism (Bush/Brown) According to Gary Becker, winner of the Noble Prize in Economics, 65% of all capital in a highly evolved economy is Human Capital, therefore, workforce management has a prominent role and the investment in technology to aid its endeavor is justifiable

Human assets are more valuable than

capital assets, but not treated the

same, at times even casually………

Many companies track assets in their balance sheet, but fail to track revenue per employee and/or analyze their bottom line impact

Hiring is often ad hoc, not rigorous or well designed

Performance metrics should be automated and ongoing

Development dollars could be ambiguous or inefficient

Little effort is spent in facilitating a smooth transition from onboarding to talent management

Organizations or business groups that fail to appreciate human talent as a valuable asset, will be plagued by:

Weak earnings

Loss of market share

Financial uncertainty

Unable to service growing markets

Unable to retain good leadership

Unable to service internal clients

Name Branding suffers and top talent will avoid such companies, causing:

Lowering of hiring standards

Retaining low performing employees

Promoting un-qualified personnel

Condoning nepotism (Bush/Brown)

Does Talent Make A Difference? Bill Gates says…… “ The productivity difference between my top performers (10% of his population) and the average ones is between 3x to 10x” Average firm $160,000 IBM $300,000 HP $500,000 Cisco $700,000 Dell $1,000,000 It takes 3x the number of bodies at IBM to produce the same revenue as Dell…….IBM has lost 60% of the PC market share Revenue per Employee Total sales revenue # of employees If rev per employee is $160,000 10 x 160K = $1,600,000…Then Top talent can make an extra $1,440,000 per year (Top RPE) 10% Top Performers The rest =

Bill Gates says……

“ The productivity difference between my top performers (10% of his population) and the average ones is between 3x to 10x”

Average firm $160,000

IBM $300,000

HP $500,000

Cisco $700,000

Dell $1,000,000

Talent Lost and Won The tale of 2 cities exemplifies the consequences of talent acquisition. Babe Ruth was released over the Boston Red Sox’s penny-wise and dollar foolish approach, which has earned them only one World Series in over a century, while the NY Yankees acquired Babe Ruth and continue spending on talent over the same period, winning 26 world series. Paying for top talent is always the right choice! Babe Ruth With the Red Sox Babe Ruth With the Yankees

The tale of 2 cities exemplifies the consequences of talent acquisition.

Babe Ruth was released over the Boston Red Sox’s penny-wise and dollar foolish approach, which has earned them only one World Series in over a century, while the NY Yankees acquired Babe Ruth and continue spending on talent over the same period, winning 26 world series.

Paying for top talent is always the right choice!

If Ally Mc Beal walked in…. Why would you feel the need to also interview Rosanne to check if Ally was really skinny? It Makes A Difference!.....Act Quickly He was given an offer within 24 hours Michael Jordan (s) are gone in one day Within 10 days…the top 10% are gone Quality of hire decreases over time Top candidates hate delays Just Do It ! Kai-Fu Lee Looses lawsuit to Over hiring their Top Talent Google’s stock is up 200% since Mr. Lee’s arrival Set fixed standards Set fixed standards Set fixed Standards Expedite your hiring practice

If Ally Mc Beal walked in…. Why would you feel the need to also interview Rosanne to check if Ally was really skinny?

He was given an offer within 24 hours

Michael Jordan (s) are gone in one day

Within 10 days…the top 10% are gone

Quality of hire decreases over time

Top candidates hate delays

Cost Analysis for Loosing Talent New Hire at $60,000 Benefits 30%. $18,000 Space, Mgmt. Time, Soft Costs, Training $ 22,000 Total Yearly Cost $100,000 Recruiting & Termination Costs $60,000 Sub-Total Capital Cost $160,000 Top Rev P.E. $1,440,000 Total Capital Cost $1,600,000 How many organizations allow a $1,600,000 capital asset to walk? We can not afford to loose talent We need to change how we think about talent We need to view talent as a legitimate balance sheet item We need a “Rigorous Process” responsive to changing needs We need to effectively acquire and manage the talent we need This is a shared responsibility between the hiring managers and recruiting staff Each business units needs a “Talent Acquisition and Management Strategy”

New Hire at $60,000

Benefits 30%. $18,000

Space, Mgmt. Time, Soft Costs, Training $ 22,000

Total Yearly Cost $100,000

Recruiting & Termination Costs $60,000

Sub-Total Capital Cost $160,000

Top Rev P.E. $1,440,000

Total Capital Cost $1,600,000

How many organizations allow a $1,600,000 capital asset to walk?

We can not afford to loose talent

We need to change how we think about talent

We need to view talent as a legitimate balance sheet item

We need a “Rigorous Process” responsive to changing needs

We need to effectively acquire and manage the talent we need

Cost Per Hire (CPH) Yearly average 100 Open reqs. per 5000 employees External $ 34,844 X 100 --------------------------------- $ 3,484,400 Internal $6,625 X 100 ----------------------------- $ 662,500 Executive Search CPH HR Team CPH Yearly Savings for using Your Internal Recruiters $2,821,900 Cost Analysis for Acquiring Talent Source of Hire Internet Print Advertising Job Fairs Employee Referrals Contingency Agencies College Recruiting Executive Search Exempt CPH $ 213 2,084 1,284 500 15,596 2,544 34,844 Non-Exempt CPH $ 51 726 70 70 2,076 457 7,838 Source: EMA 2000 Cost Per Hire and Staffing Metrics Survey

HR Strategy is Key to Business Success Business Strategy Reliability Safety Asset Utilization Growth in Market Share Process Improvement HR Strategy Leadership Development Succession Planning Talent Acquisition Teamwork & Communication Performance Management Competitive Advantage Lower Fixed Costs World Class Performance Faster Decision Making Improved Revenues Efficient Operations Profits, Growth & Shareholder Value 1 2 3 Star Over Good people make companies successful and attracting Top Talent requires mastering…..

Business Strategy

Reliability

Safety

Asset Utilization

Growth in Market Share

Process Improvement

HR Strategy

Leadership Development

Succession Planning

Talent Acquisition

Teamwork & Communication

Performance Management

Competitive Advantage

Lower Fixed Costs

World Class Performance

Faster Decision Making

Improved Revenues

Efficient Operations

Client-Candidate Relations, Power Sourcing, Metrics and Reporting By Frank Pacheco The Art of War Talent Acquisition

The Art of Talent Acquisition Talent Acquisition Management Strategy Phase 1 - Understand Your Organization Understanding Talent Types Phase 2 – Understand What You Are Seeking Attracting Top Talent (Beyond $$$) Phase 3 – Recruit Aggressively Process Drives Talent Acquisition

Talent Acquisition Management Strategy

Phase 1 - Understand Your Organization

Understanding Talent Types

Phase 2 – Understand What You Are Seeking

Attracting Top Talent (Beyond $$$)

Phase 3 – Recruit Aggressively

Process Drives Talent Acquisition

Talent Acquisition and Management Strategy Multi-step process. Forces organizations to understand themselves. Basis for imbuing a “talent is an asset” culture in an organization. Makes “Performance Management” an expected practice. Promotes recruitment “branding” to make you an “Employer of Choice” (TAMS)

Multi-step process.

Forces organizations to understand themselves.

Basis for imbuing a “talent is an asset” culture in an organization.

Makes “Performance Management” an expected practice.

Promotes recruitment “branding” to make you an “Employer of Choice”

Phase One Strengths Shortcomings Culture Values Value proposition for employees Are you able to articulate the dream? Understand Your Organization

Strengths

Shortcomings

Culture

Values

Value proposition for employees

Are you able to articulate the dream?

Understanding Talent Types Active job seekers Undesirable if they had no job in 2007 May be unable of managing work relationships so they want to leave May be poor communicators because no one knows they are leaving Weak because no one is trying to keep them Passive job seekers Content/currently employed (top performer) Must be convinced to look Counter offers expected Hired rapidly when they decide to look Customers, competitors, investors and other website visitors that are already coming to your website but won’t leave a resume Passive Active These are candidates with active resumes “ C” Managers don’t hire “A” Players “ A” Players won’t work for “C” Managers “ C” Recruiters can’t recruit “A” Players

Active job seekers

Undesirable if they had no job in 2007

May be unable of managing work relationships so they want to leave

May be poor communicators because no one knows they are leaving

Weak because no one is trying to keep them

Passive job seekers

Content/currently employed (top performer)

Must be convinced to look

Counter offers expected

Hired rapidly when they decide to look

Phase Two Rigorously review – “Do We Need This Role?” Focus on the role’s ROI in alignment with your business plan Can you justify the cost for the right talent? Always aim for top performers! They produce 3x to 10x more than an average performers Understand What You Are Seeking Be prepared to answer three key questions for the ideal candidates: What do you want me to do? – Precisely. How am I to be measured ? – Precisely. How can I win?

Rigorously review – “Do We Need This Role?”

Focus on the role’s ROI in alignment with your business plan

Can you justify the cost for the right talent?

Always aim for top performers! They produce 3x to 10x more than an average performers

Be prepared to answer three key questions

for the ideal candidates:

What do you want me to do? – Precisely.

How am I to be measured ? – Precisely.

How can I win?

Attracting Top Talent (Beyond $$$) Your management style Open 2 way communications Challenging projects & opportunities Opportunities to grow and learn Overcome their concerns by discussing: How their work makes a difference How performance is recognized How performance is rewarded Degree of control over their job/life Candidate Concerns 2% 17% 19% 23% 37% 0% 10% 20% 30% 40% The bureaucratic red tape and lengthy hiring process* Offering competitive compensation Benefits, pensions, vacation time Top talent unaware of available jobs* Perception of boring and bureaucratic jobs

Your management style

Open 2 way communications

Challenging projects & opportunities

Opportunities to grow and learn

Overcome their concerns by discussing:

How their work makes a difference

How performance is recognized

How performance is rewarded

Degree of control over their job/life

Phase Three Apply proven innovations Eliminate unnecessary criteria Focus on the goal and process Be ready to act quickly. “The top 10% of candidates accept jobs within 10 days.” Hire experienced Recruiters HR professionals should design new processes Become a recruiter/salesperson Treat every candidate with respect (increase your network) Recruit Aggressively There is an ongoing Talent Acquisition War Your competitors know your top producers by name!

Apply proven innovations

Eliminate unnecessary criteria

Focus on the goal and process

Be ready to act quickly. “The top 10% of candidates accept jobs within 10 days.”

Hire experienced Recruiters

HR professionals should design new processes

Become a recruiter/salesperson

Treat every candidate with respect (increase your network)

Process Drives Talent Acquisition Powerful screening, filtering and scoring tools ensure that you find better candidates faster . Seeker Universe Filtering, Screening Scoring Client Relations Highly qualified candidates

Powerful screening, filtering and scoring tools ensure that you find better candidates faster .

Proactive & Reactive Models

Recruiting Roundtable Research (I)

Recruiting Roundtable Research (II)

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