We recently completed High Impact Talent Management®, a major research study on the business impact of corporate leadership and talent management processes.  One of the goals of this research was to understand where organizations could best focus their leadership development and management efforts to drive greatest business results.  We call these findings the top 22 high-impact talent management processes.

What we found was very enlightening (and somewhat surprising):  the talent process which delivers the single greatest overall business impact is coaching – implementing a process for executive and management coaching throughout the organization. This process scored higher than many of the things we consider sacrosanct: setting goals, aligning goals in the organization, understanding critical competencies, and high performing recruiting.

What does this result really mean?

What is the role of a Coach?

Consider the role of a coach. If you feel that you’ve been successful in your career you can likely trace back your success to two things: first, you had a series of developmental experiences in your career that gave you experience, judgment, and insights; and second, you had a manager sometime in the past that took a personal interest in you – in your work success, your career, and your personal development. This person was a good coach. Most likely, your success as a leader today is largely a result of the time, attention, and focus you received from this person.

All leaders must consider their roles as a coach. Consider the impact of a good coach.  Don Nelson, the new coach of the Golden State Warriors, is one of the “winningest basketball coaches” of all time. In a single year he took a team which had not reached the playoffs for 12 years and put them into the playoffs. 

What makes such a coach so successful? Does he know more about basketball than anyone else? Does he have some magic secret which prior coaches could never figure out? Or does he have a unique and uncanny ability to identify the skills in each player and align them toward the ultimate goal: winning basketball games? Clearly it is the latter.

This coaching quality is clearly vital to successful organizations. A coach is not necessarily a “mentor” or a “manager” – they are something different. Most coaches know less about the subject matter than the people they are coaching. In fact business coaches often come from different disciplines or different industries. Consider Lou Gerstner, the man who turned around IBM. Gerstner was called “Oreo Cookie Man” when he first appeared at Big Blue (where I worked at the time) – reflecting his experience at Nabisco (and inexperience in technology). No one thought he could figure out the complexities and business issues in a complex global high technology company. But as history proved, Lou Gerstner was in fact a fantastic coach. He applied the business disciplines and leadership qualities which IBM badly needed.

Coaching is an important skill for any leader. A good coach helps people see the ultimate goal. He asks people questions they may not have asked themselves. He gains a deep understanding of the challenges and solutions to an organization’s problems. And through his persistence, listening, and often pointed direction he brings out the best in people. And a good coach inspires people to perform.

What makes a Great Coach?

I regularly meet with business managers and executives as part of our research process. When I meet a high performing leader I always observe many common traits:

1. They have a Clear Direction: 
   They have a crystal clear understanding of where they are going. Good coaches know precisely where you need to go, and they help you get there through clarity of their vision.
   
   
2. They are Excellent Judges of People: 
   They have a keen and refined judgment of people. Good coaches know what each individual in the organization is capable of, and they put “the right people into the right jobs” or they change the jobs to reflect the excellence of the people.
   
   
3. They Create Winning Game Plans: 
   They have an uncanny ability to take complex problems and decompose them into step by step solutions. They know how to create the “winning plays.” They watch the team perform and when they identify brilliance they “write it into the playbook.”
   
   
4. They Know how to Develop People: 
   They develop people. By taking a tough but personal interest in their team, the inspire others to follow, improve themselves, and work hard for success. They usually do this through focus on individuals: their strengths, opportunities, and areas of improvement.

These coaching qualities apply to every leader – whether in sports, academia, business, or government. 

Why does Coaching have such High Impact?

Why does coaching create such high impact in organizations? There are many reasons: primarily, however, it indicates an overall focus on the alignment, development, and improvement of people at all levels. Organizations with well-established coaching programs have realized that performance and talent management matters.  Leaders are expressing to employees that they matter. 

It also reflects a commitment to invest in performance. Coaching programs require investment - investment in dollars and time. This investment is focused on improving operational and individual performance. These coaches are hired to “win” - not to “improve.” Such a focus forces the organization to make sure that each manager, each director, and each project leader is operating at the highest levels of performance. This rigor creates accountability and inspiration.

Applying Coaching to Your Organization

How do you build such coaching skills and success in your organization? Right now executive coaching is becoming a fad: there are more executive, management, and personal coaches than ever before. The Harvard Business Review (2004) believes that the executive coaching industry is a $1 Billion industry. There are university programs dedicated to developing executive coaches. Every major leadership development company now offers executive coaching. Executive coaches can charge $100,000-200,000 per year and most organizations state that they are well worth it.

But how do you develop a coaching program in your organization? How do you implement coaching as a leadership quality in all of your leaders? One organization, NASA, found that its managers (mostly engineers and scientists) were not engaging well with employees. They were very capable of solving engineering and technical problems, but were having a hard time dealing with strategy, planning, and personnel issues. The result was an in-house coaching program, offered through a small set of senior employees who had unique skills in listening, coaching, and development. These coaches quickly became highly regarded and the organization is now trying to figure out how to leverage and grow these coaches throughout NASA.

Ultimately coaching is a skill for any leader. Consider yourself the coach of your team – can you help them win more games? Do you have a clear picture of how to win? Do you have the right people playing the right positions? Do you have a play book? Are you exhibiting enough tough love? Do you drill your team and give them specific areas of improvement?

There are many ways to build and institutionalize coaching in your organization. High-impact organizations build coaching into the performance plans of leaders and managers. Other organizations formally assign coaches to key individuals who have high potential. Some, like NASA, build formal programs with explicit coaching roles. And still others create special 1:1 mentoring relationships with senior executives.

If you can exhibit all these skills and apply them to your organization, then you are likely one of the highest impact organizations in our research. If you are not there yet, then you should probably rethink your role as a leader: think “coach”, not “manager”. Think “building a winning game plan” not “managing the organization.” 

The Top 22 Business Processes which Drive Business Impact 

In 2007 we conducted one of the largest-ever studies of corporate talent management:  we interviewed and surveyed more than 750 corporations to gain an understanding of their business problems, their talent challenges, and their levels of maturity and sophistication in 62 different talent management processes.  

This research was designed to do three things:  first, gain a clear understanding of how corporate talent management is defined;  second to understand the trends and directions in implementing these processes;  and third, most importantly, to see how talent management drives business results.   The research was extremely successful and also very enlightening.  Readers who would like to get a good understanding of the findings should read the executive summary.  The full 300+ page report is available at www.bersin.com/hitm or by joining our research membership program.  

The most interesting, and perhaps controversial part of the research, however is the following.  When we looked at the 62 different things which organizations can do to improve their talent processes (the list is available in the report), we found that there were 22 in particular which drove particularly high impact.  These “top 22” as we call them represent the “priority list” for HR executives, managers, and business leaders to consider when they decide they want to “do a better job of managing and developing talent.”   In other words, they tell you precisely where to focus.  

When we looked at the final results, the findings were both obvious and subtle at the same time.  While many books and articles have been written about the value of various HR processes, we consider this list “modern,” “unbiased,” and “scientific.”  We have not applied any personal opinions to this list – it was generated from the research statistics and analysis.  (For a description of the methodology, please read the executive summary.)  

Fig 1:  Top 22 High Impact Talent Management Processes

Here is the list.  Each process is clearly described, and color coded into process areas (performance management, sourcing & recruiting, workforce planning, competency management, learning & development, and leadership development). 

Let me spend some time explaining some of the startling findings here:  

1.  The #1 process organizations should focus on is coaching.  Coaching?  Is that really a talent management initiative?  Yes it is.  Organizations with strong coaching cultures, programs, and support structures develop much higher levels of engagement, leadership, flexibility, and performance.  For more details on coaching, read our article “Coaching, a new imperative for Leadership.”  This article explains why this process is so hard-hitting and what you can do to develop a better coaching program in your company.  

2.  Workforce planning must become far more scientific and must identify skills gaps.  Skills-based workforce planning processes (#2 and #3) are critical today.  Most organizations have a workforce planning function, but it often consists of little more than a collection of headcount requirements for each business unit.  Organizations that succeed in today’s “tight talent” market must gain a deep understanding of their skills gaps.  They must understand these gaps among the “mission-critical” jobs first, and they must have visibility into the future of these gaps.  One of our research clients embarked on a 9 month study of workforce skills gaps and factored in retirements, attrition, new project demands, and known demographic shifts only to find that in order to make their business plan for the next 5 years they needed to find 45,000 new engineers.  This startling finding led them to a whole series of initiatives to change their sourcing, internal career development, and job placement strategies – including moving job to people and not vice-versa.  

3.  Competency management is now fundamental.  While we do not recommend that organizations try to build enterprise-wide models up front, this research (and much of our other research) shows clearly that competency management is the “currency” for talent processes and decisions.  Without a fundamental understanding of the “secret sauce” which makes your organization succeed, much of your talent decisions sit on quicksand.  Well-defined competencies help you set goals, appraise people, identify high-potentials, create development plans, identify leaders, and develop the leadership pipeline.  Seven of the top 22 processes fell into this area.  

4.  Performance management is a heavy hitter.  But high-impact performance management is not what you think.  While annual appraisals are important, they are far less important than coaching, goal-setting, goal alignment, and development planning.  In fact, performance appraisal and linkage to compensation is less important than coaching, goal-setting, and development planning.  Our research clearly shows the following:  performance management is “management.”  It takes place every day, not once or twice a year.  It describes the way that individuals interact with their immediate managers, their executives, and their work teams.  The appraisal is no more than a single point in this wide continuum of activities.  By the way, most mature organizations realize a simple fact:  all we really have in business is management.  Your company is not successful because of its products – it is successful because of its people.  How they are managed is the backbone of success.  

5.   Sourcing and recruiting is becoming a science.  In today’s labor market it is harder and harder to meet hiring targets.  We estimate that over the next 15 years there will be more than 10 million jobs available than there are ready skilled people.  This means several things:  you have to do a far better job of targeting, sourcing, assessing, recruiting, and marketing to the right candidates.  Recruiting has moved from a “purchasing” function to a “sales and marketing” function.   Moreover, there are a wide variety of new tools now available to improve the efficiency and effectiveness of talent acquisition:  exciting new assessment systems, fine-grained job boards and sourcing sites, innovative university recruiting programs, and new competitive intelligence approaches.  In addition, the days of “career development” programs are back.  Organizations must now invest in training and development programs which take the “unrefined new hires” and move them into key positions throughout their career.  Most of the learning & development managers we speak with are rebuilding a wide variety of “talent development” programs to develop engineers, sales people, manufacturing managers, and executives.  

6.  Finally, a surprising fact.  HR systems, for all their excitement, don’t add as much value as people think.  In fact, in our ranked list of 62 processes which drive impact. HR systems ranked in the mid 50s.  There are more than 50 more valuable things to focus on than the selection and implementation of an “applicant tracking system” or a “talent management suite.”   This is not to say that automation is not important – it is.  But take it for what it is – automation.  HR systems do not “create processes” – they automate processes which you must design.  A few interesting facts:  organizations that have automated performance management software are 14% more effective than those with paper processes.  But organizations with in-house developed systems are 9% more effective than those with vendor solutions.  Vendor software, then, actually reduces overall impact for the first 2-3 years.  Only after 2.4 years do vendor solutions “catch up” to internally developed systems.  

What this illustrates is that software systems which automate well-designed, well-implemented processes (typically home-grown systems) add value.  Software systems which automate non-existing processes or poorly defined processes simply create overhead.  Do not fall into the trap of thinking that your talent management “strategy” is centered around buying software.  Your strategy should focus on implementing business-driven, carefully governed processes which focus in the 22 areas above. 

Each of these 22 processes takes years to implement.  They require a close alignment with business managers.  They require careful investments in training and change management.  Software may facilitate these processes, but it does not create them.  Do not let the next big wave of software vendors convince you otherwise.  

Bottom line:  we have clearly entered a “third wave” of HR– a time when HR can add strategic value by focusing on high-value roles, solving business-specific talent problems, and helping the organization adjust to the changing workforce.  

Fig 2:  The Third Wave of HR

Focus your time on three things:  First, focus on the processes and people that matter to the business.  Find the 30% of your workforce which generates 70% of your organization’s value and spend your time there.  Second, work with your business leaders to design and implement processes that drive impact, with a careful focus on change management, governance, and monitoring and maintenance.  Third, automate as much as you can, but focus on automating processes which work – not using software to drive change.   We believe that if you follow the guidance from this research you will find talent management to be a transformational, exciting, business-changing experience. 

As always, we welcome your feedback and comments on this article.

I just completed a detailed interview with Gary Short, Kimberly Clark’s director of Talent Management.  The company has had a legacy performance management process for 20 years which had limited adoption but a very long term history.  The old process grouped employees into only three levels:  meets expectations, exceeds, or does not meet expectations.  As one can imagine, most employees were rated in the “meets” category and since there were very few guidelines for establishing these categories (objectives and competency management were not required), employees also felt the ratings were somewhat arbitrary.

The use of Clear and Distinct Competencies

 In 2003 they decided to revamp the process and build an entirely new process which allowed greater granularity, clear guidelines for objectives, and a new competency model for every employee in the company.  After studying many competency models the company decided to create six major competencies:  Decisiveness, Innovative, Inspiration, Visionary, Collaborative, Building Talent. 

Each of these competencies is applied toward employees with different “behaviors” depending on whether they are an executive, first line manager, or individual contributor.  For example, “building talent” to an individual contributor means increasing your own skills in your job.  The company developed a 9-box rating scale which rates competency assessment on the vertical axis and goal attainmnent on the horizontal axis  (this is common, typically called "performance" on the horizontal and "potential" on the vertical).  This way Kimberly Clark can clearly see how people compare between behavioral development and business goal attainment, yet the same competencies are used throughout the organization.

A Common Strategy for Performance Management

This overall approach is what we call the "coaching and development" centric approach to performance management.  Other companies such as Aetna use a similar approach, but in Aetna's case there are hundreds of competencies.  The goal here is to differentiate between "performance" (goal attainment) and "potential" (competency assessment).  Competency assessment tells the organization (and the individual) "how" they are accomplishing their goals.  It enables the manager and the individual to understand how they can improve their performance, and it gives them specific areas to seek out coaching and development.

As we describe in High Impact Performance Managememt, and in much of our most recent research on the Top 22 High-Impact Talent Management Processes, coaching and development are far more important drivers of organizational performance than simply assessing people against their goals.  Consider what a winning football coach does:  he doesn't have to remind the quarterback that he threw an interception -- what he does is identify why such an error occurred and work with the quarterback and the offensive line to make sure that such behaviors and results can be prevented in the future.

Competencies form the Basis for Coaching

The reason that competencies are so important is that they give the individual and the manager a language and a set of tools for coaching and development.  Why did a product manager at Kimberly Clark create a product which may not have succeeded?  Perhaps he or she was not "decisive" enough, in the right way.  Once again we see that competencies make up the bone-structure of many of our high-value talent management processes.

Leighanne Levensaler and I just finished a week at the HR Technology show in Chicago. This conference represents one of the biggest meetings of HR technologists and HR software vendors each year. Here are some of our major findings this year.

Talent Management is the Rage, but Can we Agree on What it Is?

There is no more discussion about Talent Management vs. Human Capital Management – everyone has adopted the talent management term. In the VP of HR talent management panel, each of the five attendees actually had very different definitions about what the term means. Liviu Dedes from Aramark talked about the need to provide scalable and consistent processes across many different organizations and talent pools. Valerie Norvell from Luxottica expressed the need to create dramatically different behaviors among their sunglass retailers to meet the needs of different brands. Andy Ortiz from HealthNet mentioned the need to improve workforce performance and skills across the organization. And Mary Ruiz from Yahoo mentioned that talent management forms the basis of capital value in our economy. Clearly talent management means different things to different organizations. Our research tells us that talent management is a specific strategy for each organization which drives high performance, agility, and engagement in the workforce.  (For more information here, please read our High Impact Talent Management® research.)

Talent Management Suites are Really Here.

There is no question that there is a new software “category” in HR systems: integrated talent management suites. Every major HR systems vendor now offers a suite of some kind, including some combination of recruiting, performance management, competency management, compensation, succession planning, career planning, and learning management. The financial community is also fueling this: Authoria, CornerstoneOnDemand, GeoLearning, SuccessFactors, and Workstream have all recently received major rounds of venture funding. Several of the financial analysts we spoke with told us “we have plenty of money to invest in this space, help us figure out who the winners will be.”

Our principal analyst, Leighanne Levensaler, presented her breakthrough new findings on the market for talent management suites, showing how complex and immature this market continues to be. As you will see from the notes in this posting, almost every company in this market now has a performance management system – but how integrated are all these modules? We’re not quite there yet. For an executive overview of this research, please click here. The final report will be available in November, and you can purchase it now at a discount.

One of the things we’re seeing in the software market is an increased focus on real integration and improvement of user interfaces. While the suite market is still very new, and most organizations cannot adopt an entire suite, vendors are moving beyond the simple “four packages from the same vendor” toward a truly integrated solution which uses a common user experience.

Workstream 

We met with the executives from Workstream, who launched their next-generation talent management 2.0 product with much fanfare. The product looks fantastic, and in fact the dashboard interface is so sexy and appealing to business leaders that many people crowded around the Workstream booth just to see how it worked. We believe that Workstream has done an amazing job of integrating the products from four acquisitions into a seamless product set. While there is still much work to do behind the scenes, we believe Workstream will pick up speed and gain market momentum in the next 12 months.

SHL Group

The topic of competencies came up a lot in our meetings. As strong advocates of competency management as a foundational process for talent management, we found ourselves very well aligned with the thinking of many companies. In particular we had several in-depth meetings with SHL Group, one of the largest (but not well know in the US) talent management solution providers in the world. SHL, a $155M company, provides a deep research-based solution for psychographic and skills-based competency assessment. Such competency assessment, built upon many years of behavioral research and the company’s well-developed competency model, can be used for many high-value talent management problems:

• Assessing candidates for hire
• Assessing skills during restructuring, mergers, and acquisitions
• Assessing high-potential managers for leadership positions
• Assessing highly skilled professionals for succession planning.

The value of solutions like SHL Group and Vangent (a similar company which has just entered the US market with excellent solutions) is tremendous: huge increases in the quality of hire, rapid assessment of candidates for organizational transitions, and tremendous efficiency improvements in hiring.

While these companies (SHL Group and Vangent) tend to compete with Taleo, Kenexa, and other software providers, in many ways they are complimentary – by focusing intensely on providing world-class assessment solutions, they greatly increase the value of any talent management system.

Kenexa

We had an excellent meeting with Rudy Karsan, the CEO of Kenexa. Kenexa, a company which most talent management solution providers emulate, thinks about talent management the way we do – as a business solution, not an HR solution. Rather than focus on increasing speed and reducing cost, Kenexa’s solutions (software, content, and consulting) focuses heavily on improving the quality of hire and quality of management – focusing on helping people “hire the best” and “retain them.”

Our discussions focused on many strategy issues, including the company’s 2006 acquisition of learing recruitment management software provider BrassRing and its inevitable march into the talent management software market. While Kenexa’s total go-to-market strategy focuses on business-driven consulting and organizational design strategies, the company is now generating more than $100M in revenue through software and platforms, making it a very important player in the talent management systems market.

As Kenexa continues its global reach and expands its talent management solutions, we believe the company is likely to enter the important market for learning solutions. All our discussions with HR managers at the show confirmed our findings here – all talent management strategies are dependent upon strong strategies for competency management, learning, coaching, and employee development.

Vurv

Vurv, a fast-growing and increasingly important player in the market for talent management suites, introduced Vurv Perform 4.0, highlighting the company’s new performance and succession planning solution, adding deeper integration across the platform and new value-added content. Vurv now has an integrated suite with strong features for recruiting, compensation, performance management and succession planning (available in 2008). Through its acquisition strategy the company has completely transformed itself from Recruitmax to a provider of complete talent management software solutions. We have always been impressed with Vurv’s heavy focus on ease-of-use and the company’s integrated offering of 70,000 different content objects: competencies, job descriptions, behavioral indicators, interview questions, and coaching ideas – for use in recruiting and in performance management. Armed with a strong new Senior VP of Global Sales, we believe Vurv will also be growing rapidly in 2008. The company truly demonstrates its “Vurv” through its enthusiastic and positive approach to this confusing market.

Lawson

We met personally with Larry Dunivan, Vice President of Products for Lawson, to discuss their newly announced strategic human capital management suite. Larry introduced us to two of Lawson’s new customers – Sitel and CommerceBank. Both customers were very pleased with Lawson’s collaborative approach to HCM software product development – one had switched from Oracle to Lawson and the other was going through a major expansion to HCM due to organizational growth.

Because Lawson is an ERP software provider (the company offers an HRMS and complete financial application, similar to Oracle, SAP, and Workday), the company’s HCM software can be totally integrated into its other applications. (See our research bulletin on Building an Integrated Talent Management Systems Architecture for more details on this issue.) The company’s performance at the “HCM Battle” against Oracle and Workday was excellent – almost all of the viewers rated Lawson far above Oracle in its ability to deliver an integrated HCM suite. While Lawson is not a fast-growing company, it has more than 4,000 existing customers who are now excellent prospects for the company’s integrated HCM suite.

Taleo

I had the pleasure of flying to Chicago with two key Taleo employees from the product management organization. As we have written about earlier, Taleo’s newest product, Performance 2.0, takes a groundbreaking new approach to performance management, with a very user-centric “Facebook-like” user interface which avoids the typical screens of data entry fields, tabs, and pull down menus. While the product is not in general availability yet, we believe Taleo’s offering will “make waves” in the performance management market because it helps companies understand how these systems can truly move from “performance appraisal automation” systems to “employee management support” systems.

I firmly believe that the performance management software market is going to change rapidly in the next few years, and quickly morph into a platform for all aspects of management – far beyond appraisals, 9-box grids, and development plans. Taleo sees the same potential in this segment.

Salary.com

One of the bigger eye-openers to me at this event was our meeting with Salary.com. This is a publicly traded company with very strong momentum (a market capitalization of $245M, on sales of about $30-35M, a very high multiple – almost 5-times higher than LMS companies, for example). While the company is most widely known for its large database of compensation data and its compensation analysis system (which is used by more than 7,000 organizations), the company also has built a talent management suite. Salary.com’s TalentManager® is designed to implement performance management and tightly link it to the company’s compensation management and analysis system. Such a system is very well positioned in the market for “pay-for-performance” solutions.

In addition, Salary.com recently purchased ITG Competency Group, a well positioned company with one of the largest databases of skills and competencies in vertical and functional job areas. ITG is a small company with deep competency models which have been developed over many years. The combination means that Salary.com has the ability to build out a complete talent management system with world-class competency libraries included. Unfortunately ITG also works with every other software vendor (I suppose that may now change). Ultimately Salary.com is assembling an excellent software solution – we just believe the company needs to focus its marketing emphasis on driving higher awareness of these products.

StepStone

Another interesting and very important player in the talent management software market is StepStone. StepStone, a $175M public company, is one of Europe’s largest providers of job portals. In fact, in Europe the term “StepStone” has become a noun to signify a job website.

Earlier this year the company acquired ExecuTRACK, a complete HRMS and HCM system used widely by mid-market companies in the US and Europe. This summer the company rebranded the product StepStone ET Web Enterprise. The product is well known throughout the world, with customer such as Lufthansa, McDonald’s Deutschland, DHL, Cadbury Schweppes, Statoil, and others. The company has just set up their US sales and service organization in Austin, Texas and we expect them to start an aggressive push on the US market. StepStone’s system is discussed in detail in our Talent Management Suites research, available in November.

Workscape

Authoria

We spent a few hours with Authoria at the show as well. We have always considered Authoria one of the most knowledgeable and forward-thinking talent management systems vendors. The company developed their suite strategy years ago, and through the acquisition of highly capable companies, has developed an integrated solution for recruiting, performance management, salary and incentive compensation, and benefits communication. The Authoria 2007 platform, the company’s new integrated technology platform, is now becoming available.

Authoria had two particularly notable announcements at this conference. First, the company released a new version of its recruiting product. This new release focuses even heavier on helping organizations manage “quality of hire,” by taking advantage of an improved employee profile (“job model”) which integrates pre-hire questionnaires with resumes and other candidate information. As we discuss in our bulletin on selecting a talent management architecture, these types of “employee profile” extensions are critically important to understanding how to focus on hiring the “best” people, not just improving hiring speed or reducing hiring cost.

The second, and probably more interesting news, is that Authoria won the “Performance and Recruiting Shootout” – competing against HRSmart, SuccessFactors, and Vurv. Authoria’s well-developed recruiting application (a very mature system purchased from Hire.com) and the company’s elegant user interface stole the show. Our principal analyst Leighanne Levensaler, worked closely with Bill Kutik, show chairman, to develop this script. You can see this script demonstrated by other vendors at our IMPACT 2008: The Business of Talent™ conference in April. (www.bersin.com/impact) .

IBM

Let me make one mention of a company we all know well, IBM. As many of you know, I spent 10 years of my career at IBM and continue to have admiration for this amazing company. I spent several hours with Tim Ringo, IBM’s new Global Leader of Human Capital Management services. The company has clearly “woken up” to the market for talent management systems, processes, and business consulting. Tim has effectively convinced IBM that this market is real and transformational – and is now actively recruiting around the world to grow the consulting organization. I will not disclose any of IBM’s strategies (I am sure they will be visible to many of you), but suffice it to say that IBM has a unique ability to bring business and technology expertise, software, and an extensive internal experience in talent management to this market.

The LMS and Performance Management Systems Market

I gave an in-depth presentation on the market for LMS and performance management systems. Even though the session competed with one of the shootouts, we had more than 250 people in attendance. Clearly the LMS market continues to be big, evolving, and confusing to many companies. For more details on this presentation, you can view an online version of this presentation in the Research Library. 

Client Discussions

We had many conversations with research clients at our reception, including Starwood, The Gap, Molex, ING Bank, OwensCorning, Wachovia, and many others. In general we found that most organizations are quite baffled by the wide range of options, multitude of possible technology strategies, and rapid changes in the HR systems market. To help organizations sort this out, we are publishing a separate research bulletin, “How to Build an Integrated Talent Management Systems Strategy” which highlights the important issues to consider.

One of the things which come up regularly with clients is the tension between IT and HR. In today’s rapidly changing HR Systems market, it is important for both teams to get on the same page and build a 3-5 year strategy for these systems, with contingency plans for various market changes. With the landscape changing as rapidly as it is today, it is impossible to predict where the market will go – so please read this bulletin if you are in the middle of this process.

Bottom Line

While much of these comments discuss software and vendor services, this conference grew to over 1,000 paying attendants this year (biggest ever). This tells me that talent management and technology has moved to center stage. We will continue to focus our research in this area, giving our readers and research members the most business-oriented, pragmatic, and high value advice and services in the market.

We recently completed our annual research conference and I had a wonderful opportuinty to meet and talk with 15 different HR and L&D executives in a special roundtable.  The theme of our research conference is The Business of Talent®, and as you will read, this theme comes through in almost every organization.  Talent management is a strategic business strategy, not just an HR initiative.

Commerce Bank and TD Bank:  Michelle Fetterman-Gaughan, vice-president and talent planning manager, discussed how her bank is going through a major merger with TD Bank - impacting 74,000 employees.  Commerce Bank developed a complete competency model for its commercial lending operation, which now must be merged and integrated into TD Bank's competency models.  A key challenge ahead is the blending of corporate cultures and different competency models and systems.  Michele believes that Commerce Bank's existing competency strategies will be extremely valuable during and after the merger, as new roles and responsibilities are defined.

Turner Broadcasting - Improving Competitiveness:  Michele Golden, vice president, talent management for Turner Broadcasting, discussed how this global media company faces intense competition in every market.  The company is putting together a three-year roadmap to create common processes, linkage of pay to performance, and new goal alignment systems to improve innovation and competitiveness.  She is collaborating with business leaders throughout the company to help craft these new integrated processes.

Aetna - Transition from Turnaround to Industry Leadership:  Deborah Kelly, head of Learning Services at Aetna, discussed how the company's management-led turnaround was built on Aetnar's pioneering work in competency analysis, job analysis, and integrated management processes.  Now that Aetna is an industry leader, the challenge is how to take Aetna’s integrated talent management process and build processes and systems to foster innovation and leadership, not just execution.  Deb’s presentation is available to IMPACT attendees on the IMPACT 2008 Online community site

Verizon Wireless - Improving Talent Migration and Culture of Learning:  Lou Tedrick, Vice President of workforce development at Verizon Wireless, discusses how the company relies heavily on operational training and rapid development processes to keep its sales and service teams up to date on new products and services. But as the company’s products continue to grow in volume and number, there is a need to drive learning down to the line manager level, simplifying the process and forcing individual managers to train workers on an informal basis.  In addition the company is now working to start migrating talent across the business entities to promote leadership development and deeper levels of succession management.

Boeing - Developing Technical Skills in the Manufacturing Workforce:  Ed Chang, senior project manager at Boeing, discussed how the average age of a Boeing manufacturing worker is 48 years old and as much as 15-20% of the workforce will retire in five to seven years.  One of his key objectives in attending the conference was to network with other attendees to identify best practices in building technical skills in newly hired workers.  The manufacturing skills required at Boeing take years to develop.  Ed’s challenge is to develop a wide variety of technical development programs to fill the anticipated gap.

Caterpillar - Global Model for People Management:  Fred Goh, director of strategic learning, Caterpillar University at Caterpillar discussed the company’s new integrated talent management model, which includes all elements of talent from recruiting to development to learning to diversity.  Caterpillar is building integrated career models throughout the company and using this new infrastructure to roll out Caterpillar’s new Global Manufacturing System.

Honeywell - Moving from Enterprise Learning to Integrated Talent Strategy:  Steven Teal, the former vice president and CLO of Honeywell, discussed how the company identified a tremendous gap in technical skills throughout its global defense and control businesses and realized that its enterprise learning function must migrate to an enterprise talent management function.  As he helped architect this new strategy, he realized that his existing role as CLO was no longer needed.  He helped the company define a new position, vice president of talent management, which will facilitate a more integrated approach to employee development, succession, and technical capability management.

Northshore Long Island Jewish Healthcare- Driving Performance through Leadership and Learning:  Kathy Gallo, senior vice president and CLO at Northshore LIJ, discussed how this well-known healthcare provider continues to be the largest and most profitable delivery operation in downstate New York.  Its talent development model, patterned after JetBlue’s flight training and GE’s leadership institute, provides deep levels of technical development for nurses and medical professionals, focuses heavily on leadership development and action learning, and focuses heavily on innovative learning techniques to drive the highest levels of patient care, employee retention, and performance.

Northrop Grumman - Retaining Talent in a Company of Acquisitions:  Kathy Thomas, vice president of learning and development for Northrop Grumman, described how this 120,000 employee organization operates as diverse business entities with loosely-federated model for employee development.  She described how the company uses a series of leadership councils to build consensus in its leadership development, executive succession management, and technical skills development across its broad and highly diversified businesses.

Yum! - Providing Consistent, Efficient, and Highly Focused Retail Training Worldwide:  Rob Lauber, vice president, YUM! University and global learning services, described how this one-million- employee powerhouse (Pizza Hut, KFC, Taco Bell, and other brands) is just now rolling out world-wide training systems and programs to provide consistent, sharable training programs in restaurant operations.  This complex implementation will give the company the ability to run brands independently yet provide tremendous sharing and efficiency in functional training, onboarding, food safety, and other important operational talent development needs.

Xerox - Implementing a New Strategy for Continuous Learning in Professional Services:  Gary Vastola, vice president, Xerox global services, discussed the implementation of a three-year plan to blend classroom, e-Learning, and Learning 2.0 tools to develop the knowledge and skills of Xerox services resources worldwide.  This operation will focus on promoting a continuous learning culture and has been incorporated into the overall Xerox global services strategy.

Aramark - Creating a Common Talent Scorecard among Broadly Distributed Operations:  Liviu Dedes, vice president of organizational effectiveness and development for Aramark, described how the company manages its widely distributed businesses in food service, prison operations, and other people-intensive businesses.  He discussed how he has instituted a standardized human capital scorecard across the corporation to facilitate operational reviews of talent, standardized processes, and global talent data to help his team implement focused programs to solve talent management problems throughout the company.

Wellpoint - Implementing an Integrated Talent Process and Performance-Driven Culture:  David Casey, vice president of talent management for Wellpoint, discussed how the company has been rebuilding itself after a major merger into an innovative culture by developing an integrated talent management strategy, centralized L&D strategy, and new process and systems strategy to drive leadership development, a performance-based culture, and faster response to talent gaps in the company.

The Business of Talent

These are only a few of the leaders who joined us this year at IMPACT 2008:  The Business of Talent®.  I was inspired and energized by the business focus and technical prowess of these leaders.  Enterprise learning and talent management is never easy and never a one-size-fits-all solution.  Each organization must use its skills in leadership, organizational development, and learning to build the right organization, processes, tools, and systems to drive business change.  Conference participants demonstrated that enduring organizations are “talent machines” - they focus on people first, and products and services second.

We look forward to your comments.  And look for details on IMPACT 2009 coming soon.  We have even more planned for next year's conference.

Talent management challenges vary from country to country.  We recently completed a series of discussions with Pemex and Banamex in Mexico, as well as several companies in China and Europe.  While here in the US our biggest challenge today is leadership development and building the leadership pipeline, in many developing countries the problems are more fundamental:  there are not enough trained professional or technical workers available to grow.

In Mexico, for example, one of the biggest and most successful companies is Pemex, the Mexican energy company.  Pemex's challenges, like any oil company, include development and training of highly technical professionals in exploration, production, refining, and other production roles.  Because Pemex is such a large employer in Mexico, they built a comprehensive multi-year development program for employees in almost every role.  This program, which is built around an in-depth competency model, enables Pemex to develop and deliver many forms of education and development in a highly targeted way.  It also enables the company to implement multi-year career and succession models for critical roles.

Pemex has a highly advanced set of processes:  they have more than 900 employees engaged in the talent management program, along with 500 executive positions with named successors.  They use psychometric assessment tools to measure competency and potential, and this information is captured in an internally developed performance management system (migrating to SumTotal over time).

At Banamex, another high performing company in Mexico (the Citibank subsidiary), the company went so far as to build an internal university - designed to deliver college degrees and advanced degrees in business to their high potential employees.  Banamex employees who participate in the program do homework in the evenings and consider themselves highly priveliged to be invited.  The program has built a tremendous employment brand for Banamex - which is considered one of the premier employers in Mexico.

These companies have something else going for them:  they take a long-term view of their workforce.  Because they see many key employees retiring and a limited source of people by age or skill level, they do not have an "up or out" mentality to their workforce.  Rather they use what we call the "coaching and development" form of performance management:  focusing on finding the right jobs for people, developing them over time, and building a long-term career investment in each individual.  These may seem like old-fashioned ideas to many fast-growing US companies, but these are the principles which build "enduring organizations" when the labor market gets tight.

There is a lot to learn from global talent management strategies. We are actively globalizing our research now so you can expect to see more in-depth case studies on these and other global companies in the coming months.

In the last few months we have read more and more about the global economic slowdown.  Jim Cramer, the Wall Street pundit, wrote in today’s New York Magazine, that he has never seen things as dismal as they are on Wall Street.  Today the State of California announced a 5.7% unemployment rate, an increase of almost 12% over last month.  And I have noticed a fairly steady increase in HR and L&D leaders now looking around for work.

How is this affecting our HR and L&D organizations?  Our most recent Business of Talent® survey shows a similar impact on corporate HR and training.  Today 45% of HR and L&D executives cite “reductions in cost” as their top priority for the coming quarter, an increase of almost 30% over the last three months. 

In our just-released High Impact Learning Organization® research, we see similar trends.  Today’s L&D managers and executives cite “reducing the cost of training” as their #2 challenge, after business alignment.  And for the first time ever, people cited “building a business plan for learning” as their #3 challenge - illustrating the need to further take L&D investments and make them business-relevant and operationally excellent.

But in the midst of such news, we see many many good things coming.  As I mentioned in our earlier post on the economic downturn, “only when the tide goes out can you tell who is swimming naked.”  Now is the time for HR and L&D to become more relevant than ever.  In fact, one could argue that business slowdowns are good for talent organizations - they force us to become laser focused on what really matters now.

Witness some critically important things going on:

• Organizations are focusing very heavily on building critical capability models for success.  Such models are mandatory to determine who to hire, who to develop, and who to lay off.  Organizations such as British Telecom, Microsoft, Chevron, GSK, Mercer, and Pemex are all spending significant new dollars to identify their critical competencies.  Such work is strategic and long-lasting.

• Organizations are looking more carefully at HR systems investments.  We now see RFPs from companies which look far more carefully at the business strategies behind talent management, rather than projects to “automate” processes which may or may not be adding value.  One of the world’s leading consumer packaged goods organization recently asked us to help them rebuild their business case for talent management systems after spending six months gathering requirements.  Such an effort is good - it creates focus and business alignment in HR systems investments.  Nothing is worse than buying HR software to find that noone wants to use it.

• Informal learning is exploding.  We are just about to publish a major research report on the use of social networking in corporate L&D.  Organizations now realize, often driven by cost reductions, that the corporate L&D organization can not possibly build all the content the company needs.  They are starting to invest in social networking and communities of practice as a mainstream solution.  In fact, in our High Impact Learning Organization Top 18 findings, we found that informal learning and content sharing are now more important to success than the traditional disciplines of performance consulting.

• Centralization is coming back.  Almost all the clients we talk with now are looking for ways to reign in spending on L&D and other HR initiatives throughout the company.  Such efforts may look like cost savings from the outside, but inside they are driven by the intense need to coordinate L&D and HR efforts to build an integrated talent management process.  Caterpillar, Aetna, Rogers Communications, Wellpoint, and other clients are all focusing heavily in this “strongly centralized federated approach.”

We are preparing a series of reports on the economic trends driving HR, so stay tuned.  Even if the economy does continue to slow down, I hope you believe, as I do, that such a slowdown will not last beyond early to mid 2009.  My experience talking with hundreds of organizations shows me that even in times of great dislocation, our economy is filled with entrepreneurial and creative spirit to build new businesses in the face of change.  And change is something we must deal with in good times and bad.

More to come…  your comments welcome as always.

We have all heard about the “Peter Principle,” which is the principle that “In a hierarchy every employee tends to rise to his or her level of incompetence.”  The principle holds that in a hierarchical organization people are continually promoted until they reach a position at which they are no longer competent (their “level of incompetence”) ...  and there they remain. 

We all see this happen in many organizations.  But how do you manage someone who is "topped out" and how do you compare their level of recognition, compensation, and investment to those who are continuing to move up the ladder?

Consider the following model, which we developed as part of our succession management research.  Rather than think of people as "competent" or "not competent" we think of people as "high-performers" vs "high-potentials."

Fig 1:  High Potential vs. High Performer 

As this model illustrates, a high potential employee is a high performer with the potential to move upward.  A high performing employee is a high performer without the potential to move upward.  Notice the focus on upward. 

What we find is that while many individuals may have “potential,” few have unlimited potential.  (Why do you think that succession plans for the CEO position are always so limited?)  The trick for organizations is to recognize when this competency level has been met. 

Consider a high-potential first line manager.  This person may be on the fast track, but then at some point reach his or her potential when they become a mid-level functional manager.  When this occurs, he/she literally transitions from being a high potential employee to a high performing employee.  They are still considered a a high-level contributor, and can continue to receive accolades, raises, and increases in certain responsibilities.  But their career plans and develpoment plans change. 

Consider a high-performing engineer or sales person who is promoted to management. They were highly competent as individual contributors and were considered to have "management material" - so they were placed on the HIPO ("high potential") track.   But one may find that this high-performing contributor really is not a good manager, and therefore should not be considered a HIPO.  And often we blame them for not "making the transition" to management.

How do we avoid this kind of mistake?  Why are employees frequently promoted into leadership roles for which they are incompetent? 

There are two primary reasons:  
 

1. Lack of a leadership "model."  A company does not have the assessment processes or tools in place to determine someone’s potential.  The organizations has not clearly defined its leadership competency model and the specific skills and knowledge needed to move to this next higher level.  Without such tools, high performers are often considered high-potentials simply because they seem to "know what to do."  As we all know well, leadership skills are far different from functional skills - and warrant a seperate and different approach to assessment.
2. Inability to be honest and create career opportunities for high-performers.  A second common problem is the desire to "motivate" a high-perfomer.  In this case a company believes that it will lose a high performing employee if he or she is not moved upward into a role with greater responsibility.  Here the intentions are good, but the process is likely to fail.  Not all high performers will rise to top management, and organizations must have career paths for high performers who are not necessarily HIPOs.

The irony is that companies will lose high performing employees in either case.  Companies should not confuse high performance with high potential.  The two concepts are different and both are important.  Organizations which focus too heavily on "up or out" are embracing an outdated model - one which only works in an environment of talent surpluses.  Today all organizations must realize that the corporate pyramid is built on a foundation of strong individual contributors and subject matter experts, not only managers and directors.

Three key considerations that companies can address to improve in this area are:
 

1. Develop job profiles - clearly define the responsibilities, skills, and competencies needed for all positions - including clearly defined leadership competencies and responsibilities for higher level positions;
2. Use strongly validated assessment tools - take advantage of the years of research which have gone into understanding what it takes to become a leader.  Many companies, including DDI, Vangent, ProfilesInternational, Lominger, and others, have undertaken years of research to develop proven assessments which help you assess an individual's current capabilities (and gaps) at becoming a higher level leader;
3. Create excellent lateral opportunities for high performers - make sure your organization's career models clearly illustrate the development and career opportunities for professionals at all levels.  People who perform well want to improve their careers, even if they may not be ready for (or interested in) moving up the corporate pyramid.

I encourage organizations to consider this model in every function in your organization if you want to build development, succession, and management processes which drive high levels of performance, engagement, and retention.

Why Deep Specialization Matters  

Times are tough. Today we learned of another 590,000 jobs lost and that the US unemployment rose to 7.6%. We seem to be getting several emails each week from high powered HR or L&D professionals who have lost their positions at their favorite employers.

I also speak regularly with top HR and L&D managers about their internal career development and talent management programs, and I see a major shift taking place: organizations and individuals are changing their view of what we call career potential - with a stronger and stronger focus on deep levels of specialization.

I call it the "deep vs. wide" career strategy.

The Traditional Business Career: Breadth and Influence is Valued

Consider the traditional, somewhat old-fashioned idea of a business career.  You start your profession as a trainee or junior person in some organization, and you develop some level of expertise.  If you're lucky, you get rotated to another position to help round out your expertise - and then hopefully get promoted to management.  Once you have reached management status you realize you're now on the "fast track" - time to read up on management styles and behaviors, and start shooting for that big Director office in the corner.  And if you work hard enough, play the politics well, and learn how to lead change in the organization, in the next 5-10 years you find yourself in a position as a mid-level leader or young executive.

Now that you've arrived at this high level position, you look for an opportunity to move from a "manager of managers" to a "manager of a business" - and in many companies this involves changing locations, changing functions (from sales to marketing, for example) and possibly even changing industries.  Your experience and level of confidence rises, your salary gets doubled, and you see yourself rising into the ranks of a real "executive."

Companies like GE, IBM, ("I've been Moved"), Procter & Gamble, and many others popularized this model in the 1950s and 1960s and many of our internal processes for succession management (the famous 9-box grid) were built around this career model.  The whole theory behind this model is that your value to an organization goes up exponentially when you develop a larger and broader sphere of influence.

Today's Reality: Deep Expertise and Judgement is Valued

Well the world has changed.  Today's organizations are narrower at the top, and these "executive" positions are more stressful, more accountable, and more risky than ever.   People now work in organizational networks, not true hierarchies.  And ultimately businesses change so fast that the business you are running is likely to change right out from under you.

Can a traditional GE manager understand the company's dramatic transformation into green energy, low cost financing, and globalization of every business process?  Will an old-fashioned IBM general manager be able to understand the company's need to shift its resources into global innovation centers, learning on-demand, and cultural collaboration for every client engagement?  Maybe, maybe not.

Right now we are in the middle of helping two highly innovative companies (one in telecommunications and one in pharmaceuticals) revamp their leadership development programs.  In both cases the HR leaders have realized that the traditional leadership development model is not working: they have to find a way to develop, promote, and honor the specialist leaders: the individuals with deep levels of expertise who know more about certain mobile technologies or pharmaceutical markets than anyone else in the company.

Should these people become generalists?  No.  In both cases we realized that the success of these companies is dependent on deep levels of expertise and judgement: not simply good management and leadership skills.

This is not to say that leadership capabilities are not important: they clearly are.  But if you look at what we call "enduring organizations," they endure because they are very focused on their core competencies:  they are the "best in the world" at one or two things.  Intel succeeds through its vast experience in the design and manufacture of highly dense and complex integrated circuits.   Qualcomm succeeds through its patent portfolio of a wide array of wireless technologies.  Pfizer made its business by developing some of the world's most important pharmaceuticals.  McDonald's continuously maintains its growth rate by its intense focus on low cost, easy to produce foods for the masses.

These companies did not become billion dollar companies by hiring and developing "good managers" - they did it through expertise and specialization.  Early in their lives they found their niche: they focused heavily on it over many years; and they build deep levels of skills, expertise, experience, and sustainable competitive advantage in these areas.

Changing the Career Pyramid

So what does this mean to job seekers and HR executives?  Rethink the career pyramid.  Rather than try to build or become a generalist, honor and focus on becoming a specialist.  Deep skills and expertise give people deep levels of judgement: if you hire an engineer with more experience and skills, they will make better decisions about what to build, how to build it, and whether or not a product will succeed.   If you are building a career model for manufacturing leaders, focus the competency model on the core competencies of excellence in manufacturing, not just excellence in management and leadership.

Fig 1: Redefining Career Development

If you are out on the job market looking for work, you will quickly learn something I learned 10 years ago when I was laid off:   identify the skills you have which are world class.  If you have world-class expertise in something, you will always find great work awaiting you.

If you are an HR executive, L&D manager, or HR leader, consider re-thinking your model of "high-potential."  In the old model, a "HiPo" was someone who had the potential to be "promoted" two levels or more.  But in today's world this concept must also include the technical professionals, consultants, engineers, financial analysts, and even sales people who may be the best in class in their roles.  Should they be incented to move into "general management?"  Probably not.  Your company will be far more successful (and these people will in-turn be more engaged) if these specialists are rewarded and incented to further build and exploit their deep levels of expertise.

Watch for our upcoming research study on career and succession management for far more on this topic.

Here's to the specialists and experts in the world: may you become even deeper, more specialized, and more expert every day. If you do this, your career will grow and grow even in today's economy.

Background:

There are many types of employee assessments, including pre-hire assessments, leadership assessments, skills and personality assessments, and many forms of behavioral assessments.  Each assessment "instrument" is typically developed by a scientist (this is the domain of IO Psychology) who validates that the assessment actually does create valid, repeatable, defensible results.

Most large companies purchase and use many forms of assessment for hiring, promotion, and leadership - and each assessment typically costs $10-100 or more per use.  The assessment instruments are usually packaged as products, but are usually sold in groups with consulting added.  An assessment firm will typically consult with a company to understand a particular job role's profile, specific competency requirements, behavioral and cultural needs, and other requirements and then customize the assessment for these requirements.

There are also many "types" of assessments:  behavioral, skills-based, personality-based, simulation-based, adaptive, and very high-value face to face assessments.  Because there is no "perfect way" to find the right person for any particular job, there is a huge history of scientific research which tries to validate the use of various assessment models for different job roles (e.g. sales, IT, general management, customer service, etc.).

Because this whole problem is quite complex, the market is highly fragmented with hundreds of companies.  The largest players in the market include Previsor (which is the combination of ePredix, PDRI, Qwiz, Brainbench, TalentTechnologies, and several smaller companies), SHL Group (a highly science-based assessment company which is most widely known in Europe and Australia), Kenexa, Hogan Assessments, DDI, PDI, Profiles International, Vangent, and many other companies.  Each of these companies has its own market niches, but few ever reach revenues greater than $75M.

We estimate that the entire market for such tools and consulting to be somewhere between $1.5-2 Billion, but more than 1/3 of this market includes custom consulting - since so many large companies purchase customized assessments for their own particular business needs.

Dynamics of the Assessment Market:

Assessments and IO Psychology is really like a secret weapon for HR departments.  When well understood and used, assessments can double or triple the quality of hire for high-volume hiring processes.  When used well for leadership and executive roles, assessments can have a huge impact on the hit-rate of leadership development.  But since the market is somewhat scientific and arcane, many companies still do not fully understand how and why to use assessments - so there is still a lot of "snake oil" out there.

For example, in our soon-to-be published High-Impact Talent Acquisition research, we found that 64% of companies have some form of pre-hire assessment and around 32% use some form of behavioral interviewing or assessment.  Yet only 25% have any well-defined job competencies for each particular role.  This means companies are buying "off the shelf" assessments for many positions where they have not necessarily tailored the assessment for the competencies they need.  Ultimately an assessment which fits well has a huge ROI, so one of the benefits of working with a company like Previsor is that they have hundreds of off-the-shelf assessments tailored to different roles and types of roles (e.g. there are many different types of sales positions).

In addition, since most companies are now global (and globalization is now one of the biggest trends in HR and talent acquisition), buying assessments can be quite difficult.  How does an HR manager know, for example, if a well designed pre-hire assessment for a US-based retail employee would even work for a candidate in China?  Companies like Procter & Gamble spend millions of dollars on their own research to understand global competencies for their particular roles. Addressing global roles is  one of the big value propositions of the SHL-Previsor merger - together these companies have more than 1,000 validated assessments to sell - and many have been designed to meet the needs of employees in 50 different countries.

How this Changes the Assessment Market:

Here are a few details:

• Together the combined companies now have over $200M in revenues, more than 850 employees, and do business in more than 50 countries.
• The company will continue to do business as SHLPrevisor in the US and SHL outside of the US, building on their establish brands.
• The combined company remains private, but is highly profitable, with profits well over 20%.
• The combined company now has a global platform for business and product, enabling it to sell to global companies around the world.
• The company is clearly the biggest assessment provider in the market (approximately 55% of its revenues come from assessments, 30% from consulting, and the remainder from other sources) and claim its position as #1 in the world.

Assessments Are More Strategic Every Day

It is also important to understand that with the growing awareness of integrated talent management and the new talent management systems becoming implemented in many companies, the role of assessments is growing.  Some of the big questions companies ask (e.g. Do we have people with the right potential to grow into the roles we need next year?  How do we create a more "solutions oriented" sales force? What are the characteristics of our best leaders or customer service agents and how can we hire more of them?) are really problems of "people science."

A solution provider like Previsor-SHL has the ability to address some of these bigger organizational issues, and if the company executes well, can become a close strategic partner to its global clients.

We are just now completing a study of the prehire assessment market and look forward to giving you more information on this fast-growing space.  This merger changes the whole makeup of the assessment market, and will hopefully create a "gorilla" which can advance the science and thinking of assessment in a very strategic way.