TALEO RESEARCH WHITE PAPER

UK Critical Talent Pipelines in 2012

Table of Contents Executive Summary.......................................... 3

Critical Talent Landscape...........................................................4 What are the Critical Roles? ......................................................4 Closing the Gaps ........................................................................4

Critical Talent Landscape................................. 5 What are the Critical Roles? ............................ 6 Which Critical Roles are Most Difcult to Fill? ............................................................... 8 Closing the Gaps .............................................. 9 Conclusion ...................................................... 10

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Executive Summary
Finding and managing the right talent is crucial to a companys success. While this is true regardless of macro economic conditions, the inability to nd and manage talent in a depressed or uncertain economy can be a precursor to organisational failure. Companies today operate in a market of thinner margins, lighter demand, credit and liquidity challenges, and an uncertain outlook for 2012. Talent decisions, particular those related to critical talent, can take on outsized importance given the lack of strength across other business fundamentals.

SAMPLE BREAKDOWN INDUSTRY SECTOR

0% Public Sector Construction/Manufacturing Financial Services Hospitality/Leisure Pharmaceutical Retail/Wholesale Business Services IT/Technology 12% 12% 11% 11% 11% 11% 5% 10% 15% 16% 15% 20%

In any company, there are certain critical positions that disproportionately drive growth or support the delivery of core services, solutions or products. These positions are often very hard to ll as these skills are often in high demand within given sectors. In other cases, these positions may be hard to staff due to a growth in demand that has exceeded the pace at which the workforce can acquire the necessary skills and experience. For companies to develop and be successful in the future, they must continually seek to nd and manage talent, particularly critical talent, and ensure that they are in the right positions to maximise their value to the company.

SAMPLE BREAKDOWN COMPANY SIZE

16% 251-999 employees 28% 56% 5000+ employees 1000-4999 employees

Taleo Research White Paper | UK Critical Talent Pipelines in 2012

It is nding the gems that exist..... People that can be unique and really make a contribution to the future
Health insurance company

Now more than ever, developing pipelines of critical talent is crucial. Faced with reduced headcounts and recruitment freezes companies risk holding back business growth if they do not effectively manage the ow of critical talent in their businesses. Taleo, the leading provider of ondemand talent management solutions, commissioned Loudhouse to conduct a comprehensive telephone survey amongst 500 HR decision makers in large UK companies about their current attitudes and approaches to their critical talent pipelines. Details of the sample breakdown are shown on page 3. Whilst companies are aware of the importance of planning for the future and recognise the existence of critical roles in their organisations, the research nds that they lack the data, processes, and technology to fully deliver on a critical talent pipelines strategy. Some highlights of the research include:
Critical Talent Landscape

> 30 per cent of HR decision makers expect the size of their workforce to
increase, whilst 50 per cent forecast that it will remain the same.

> Only 60 per cent of companies are fully condent that they have the best
people in place to drive growth.

> 64 per cent say that it is extremely important to have visibility of talent needs
and gaps for critical roles and plan accordingly.
What are the Critical Roles?

> The three most critical roles for driving growth, aside from HR, are seen to > Beyond their impact on business growth, critical roles are identied in
terms of their impact on business efciency (60%) and direct nancial contribution (45%). to ll (32%) followed by nance / legal positions (24%).

be nance and legal professionals (62%), customer service (58%), and technical / IT professionals (58%).

> Technical and IT professionals are considered the most difcult critical roles
Closing the Gaps

> Companies are likely to rate themselves relatively highly on matching high

performing individuals with critical roles (68%) and identifying critical roles within the business based on business goals (66%). critical employees (54%) and determining the gaps between available and needed talent (56%).

> In contrast, companies rate themselves lower on identifying the risk of losing > Better quality data and insight is seen to be benecial in a number of key

areas, most notably risk of loss for critical employees / positions (60%), individual talent prole reports (58%), and employee development plan progress (58%).

In previous years employers may have sought to bring talent in from outside to ll critical skills gaps and ensure business continuity. Only a minority of employers expect to see an increase in their workforce and now must rely more heavily on a build strategy rather than just a buy approach to lling their critical roles. Employers recognise the importance of job t as a mechanism to drive increased engagement, productivity and ultimately growth. In evaluating whether they have the right people in the right roles to drive growth, some employers are nding that they lack the necessary data, processes, culture and technology to deliver true insight into the most valuable company asset of all, employees.
4 Taleo Research White Paper | UK Critical Talent Pipelines in 2012

Critical Talent Landscape

While companies are familiar with the concept of a talent landscape, they increasingly nd themselves facing one where critical roles are taking on a new urgency. Over the last decade the workplace has changed considerably and companys attitudes to talent and critical roles within their business have had to change with it. A variety of factors including economic turbulence have left companies less able to rely on talent coming into their company from external sources and moved the spotlight onto talent mobility.

CHANGING WORKFORCE

20% 30%

Expected change in size of workforce Stay the Same Increase 50% Decrease

21%

22%

Expected number of people leaving voluntarily No Change Higher

57%

Lower

Only 30 per cent of HR decision makers expect the size of their workforce to increase, whilst half forecast that it will remain the same. One entertainment company attributes business growth to a small expansion in customer numbers and a large expansion in the number of products we sell to each customer whilst others refer to organic growth. In this environment, it is crucial that employers are able to identify the critical roles within their business and to ensure that appropriate internal or external talent can be effectively deployed to these areas. Stability and the ability to drive growth are chief concerns to companies, with 94 per cent of companies dening some roles within their organisation as critical. One energy company considers their biggest workforce challenge to be nding people with the necessary skills and experience to meet the business requirements. Given this perceived lack of control over retention the fear of losses is a heightened concern. In a changing landscape, the need to manage talent is particularly evidentonly 60 per cent of companies are fully condent that they have the best people in place to drive growth. Pharmaceutical companies are most likely to express complete condence (70%), whilst business services (52%) and IT / technology (55%) are least likely to.
5 Taleo Research White Paper | UK Critical Talent Pipelines in 2012

IMPORTANCE OF VISIBILITY OF TALENT NEEDS AND GAPS

With 70 per cent of companies looking at static or smaller workforces, almost two thirds (64%) of HR decision makers believe that it is extremely important to have visibility of talent needs and gaps for critical roles and to plan accordingly. In order to be able to successfully ll gaps in critical roles, it is necessary
All Sectors Financial Services Pharmaceutical Construction/Manufacturing Retail/Wholesale IT/Technology Public Sector Hospitality/Leisure Business Services 71% 71% 71% 71% 71% 71% 71% 71% 71% 29% 29% 29% 29% 29% 29% 29% 29% 29% 95% 100% 97% 96% 96% 95% 94% 93% 93%

to understand the talent that already exists within a company. The benets of adopting technology and optimising internal processes to capture this information are compelling, and changing work environments suggest that this will become increasingly important.

What are the Critical Roles?

As companies become increasingly aware of the importance and relevance of talent management to their organisations so they are aware that there are critical roles vital in driving future growth. In fact, the vast majority of companies (94%) believe that there are roles within their organisation that they would dene as critical, without which their company would suffer. Beyond their impact on company growth, companies identify critical roles in terms of their impact on business efciency (60%) followed by their direct nancial contribution (45%). As this health insurance HR professional puts it it is the impact it has on the bottom line and our prot margins and how directly involved the role is in our growth strategy. The verdict is conclusive across all sectors, but in some it appears to be more critical than others: in the pharmaceutical sector, 100 per cent of HR decision makers believe that their organisation has critical roles. The pharmaceutical and the construction/manufacturing industries share the strongest view that efciency is a key measure of role criticality, at 69 per cent each. 10 per cent of companies say they do not know how to identify the most critical roles, increasing to 22 per cent in public sector organisations.

Taleo Research White Paper | Future of Talent Management, Part 1

IDENTIFYING THE MOST CRITICAL ROLES

Impact on Business Efciency Direct Financial Contribution Indirect Financial Contribution Impact on Company Brand Image Market Insight into Services Most Valued by Customers Through Quality Talent Intelligence/Data Other 3% 31% 31% 37% 36% 45% 60%

According to the HR Director of a leading energy company critical roles are ones without which we would nd it difcult to actually deliver our service. When identifying critical roles within organisations, HR not surprisingly put themselves rst, but the second most critical role is seen to be nance and legal professionals (62%). This is perhaps unsurprising as roles in this area can facilitate both efciency and direct nancial contribution. However, with a greater emphasis on efciency, companies also recognise the importance of customer service staff and technical/IT staff almost as highly (58% each). The HR Director of an energy company cites senior technical engineering roles as pivotal as without them the actual operational service that we provide wouldnt happen efciently and our customer satisfaction would decline and we would lose business.

MOST CRITICAL ROLES FOR DRIVING FUTURE GROWTH, ASIDE FROM HR

Finance & Legal Professionals Customer Service Technical & IT Professionals Marketing Professionals Sales Professionals Production Staff R&D Administrators
% Rating as Difcult to Fill (4 or 5 out of 5)

62% 58% 58% 51% 48% 47% 42% 36%

Taleo Research White Paper | Future of Talent Management, Part 1

Which critical roles are most difcult to ll?

The vast majority of companies agree that they have critical roles and that, beyond driving growth, the emphasis falls on efciency and direct nancial contribution. Technical and IT professionals were rated the most difcult critical roles to ll (32%), followed by nance and legal professionals are seen as the most critical in terms of impact on growth but are seen as difcult to ll by less than a quarter of companies (24%). One IT services company actually considers critical roles to be those that are the key areas of scarcer skills, high prole with all the major accountabilities. In this instance, critical roles are viewed as always taking the longest to ll... well tend to put a lot more time and effort into getting the recruitment for those absolutely right.

RELATIVE DIFFICULTY IN FILLING CRITICAL ROLES

Technical & IT Professionals Finance & Legal Professionals Sales Professionals R&D Marketing Professionals HR Professionals Production Staff Customer Service Administrators 11% 10%
% Rating as Difcult to Fill (4 or 5 out of 5)

32% 24% 23% 22% 22% 22% 15%

The difculty of lling critical technical/ IT roles is perhaps not surprising in an increasingly technology driven environment, where innovations are crucial in driving companies growth and efciency. It is also to be expected that while a companys technology expectation grows, the required skill of technical/ IT workers also changes. As may be expected, the relative difculty in lling such roles varies by industry. Unsurprisingly, 41 per cent of companies in the IT / technology sector nd this area particularly difcult to ll compared to an industry average of 31 per cent. One entertainment company highlights data analytics and app developer roles as being particularly difcult to ll and individuals in these roles as hard to retain simply because there is so much demand in the market in general.

Taleo Research White Paper | UK Critical Talent Pipelines in 2012

RELATIVE IMPACT ON GROWTH AND DIFFICULTY IN FILLING CRITICAL ROLES

Technical & IT

Extremely Difcult to Fill

Sales R&D

Finance/Legal Marketing

Production Somewhat Difcult to Fill Administrators Customer Service

Signicant Business Impact

Extreme Business Impact

Interestingly, outside of technical/ IT roles, companies are remarkably consistent in the difculty they see in lling other specialist roles. The top ve critical roles which employers believe are difcult to ll rate between 22 per cent and 24 per cent. As one health insurance company puts it, talented people are usually very well taken care of in the organisations where they exist, so it can be difcult trying to nd and engage these people because they are not often looking for jobs.

Closing the Gaps

While employers are showing an increasing awareness that talent must be recognised and managed internally, there is evident room for improvement in how critical talent pipelines are being managed. Companies are likely to rate themselves most highly on matching high performing individuals with critical roles and identifying critical roles within the business based on business goals, although around a third of companies do not see themselves as effective in these areas. In contrast, companies rate themselves lower on identifying the risk of losing critical employees and determining the gaps between available and needed talent. Sectors particularly struggling to see the gaps between available and needed talent are the public sector. A health insurance company HR representative considers the challenge to be more one of having a global view of data across the organisation: I think we have good data probably, but what were not good at is sharing it or having access beyond our own business unit.

Taleo Research White Paper | UK Critical Talent Pipelines in 2012

EFFECTIVENESS AT MANAGING CRITICAL TALENT PIPELINES

Match High Performing Individuals with Critical Roles Identify Critical Roles Within the Business Based on Business Goals Fill Talent Gaps Either Through Development or Recruitment Determine Gaps Between Available and Needed Talent Identify Risk of Losing Critical Employees
% Rating as Difcult to Fill (4 or 5 out of 5)

68% 66% 61% 56% 54%

Companies clearly accept that higher quality data and insight or talent intelligence would be benecial in helping them to gain visibility of and better manage their critical talent pipelines. Good quality data absolutely helps states the HR Director of a global IT services company who continues I think the most important thing that we can do is have visibility of that talent and regular conversations at board level about that talent. Most notably, companies consider that insight would be useful in identifying the risk of loss of key employees / positions, individual talent prole reports, and employee development plan progress. Having better talent intelligence into the risk of loss for critical employees / positions is of particular importance to those in the IT / technology and business services sectors, whilst the retail / wholesale sector acknowledges a particularly strong need for individual talent prole reports.

AREAS WHERE BETTER QUALITY DATA / INSIGHT WOULD BE BENEFICIAL

Risk of Loss for Critical Employees/positions Individual Talent Prole Reports Employee Development Plan Progress High Performers by Division/department Employee Development Plans Submission Rates 50% 60% 58% 58% 56%

Conclusion
The War for Talent is changing direction. In previous years, the War for Talent has been played on the recruitment battleeld and was all about competing for talent with other organisations. Recession, unemployment, and spending cuts have created an atmosphere of disruptive uncertainty which has simultaneously resulted in recruitment freezes and a heightened need for business agility. As organisations seek to enter new markets, introduce new products and services, and to grow in testing times, so more talent intelligence is required in managing skill gaps and talent.

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Taleo Research White Paper | UK Critical Talent Pipelines in 2012

Critical roles are those that drive business growth and by their very nature are particularly difcult to ll. Awareness of the importance of critical roles is a vital rst step and one that the vast majority of organisations have already taken. Understanding how to translate this awareness into a solid strategy to move the business forward appears to be where many companies now nd themselves. Business impact rather than seniority determines the criticality of certain roles, with nance/legal, customer service and IT / technology professionals nding themselves the new organisational heroes. Historically, many companies have lled such critical roles by looking outside the company. This approach in todays economic climate is both short-sighted and unsustainable given industry wide skills shortages. If a role is identied as critical, the responsibility should surely lie with employers to invest in that role, to integrate learning and development, succession, and talent mobility efforts, and to build talent from within rather than being totally reliant on buying in resource from outside. Talent intelligencethe insight companies need to unlock the power of their people is the route to organisational strength, sustainability, and the development of truly agile and engaged workforces capable of driving needed growth.

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Taleo Research White Paper | UK Critical Talent Pipelines in 2012

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