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Time for a more holistic approach to talent risk” reports how talent management is now firmly on the C-suite’s agenda with organizations competing for top talent on an unprecedented scale. For more information visit kpmg.ca/talentrisk
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January 2014
Time for a moreholistic approach to talent risk
Global risk survey calls for a new take on talent management
2© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
About this research
Organizations are competing for talent on an unprecedented scale
In this context, how effectively are
organizations identifying talent risks to their current
and future business growth?
And how effectively are they mitigating against
talent risks?
KPMG International commissioned the
Brandon Hall Group to conduct a global study of
talent-related risks
1,200 Human Resources (HR), talent, learning and business executives
54 countries
Government and 15 different industries represented
Just over a quarter of respondents work in companies with 30,000+ employees
Series of qualitative interviews
5 Cs: Talent Risk Categories
4© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The survey focused on five critical talent risk categories …
How concerned is your business?To what degree are you managing that concern?
Capability
Risks associated with building the skills an organizationneeds to compete now and in the future – the breadth anddepth of skills and capabilities present within a workforce,and how well aligned these are to an organization’s needs.
Capacity
Risks around the succession into critical roles and retentionof critical people and teams. In other words, will anorganization be able to create and maintain the size andshape of workforce needed to deliver its business plan?
Cost
What is the risk of a workforce becoming unaffordable?What will it cost an organization to recruit and retain thepeople it needs? Will it be able to afford the overall cost of its workforce?
Compliance
Risks relating to employee behavior, regulations andlaws. This category covers both the need to ensure talentprocesses comply with local laws and regulations, as wellas whether talent management is seen as a businesscritical process or an administrative process simply to ‘becomplied with.’
Connection
What is the risk of an organization’s top talent becomingdisengaged? In addition, will an organization’s talent-relatedprocesses remain sufficiently joined-up? Will it be able toshare talent between units in the way it needs to? Is it ableto connect groups of high potential people together? Areleaders able to create an emotional connection betweenhigh potentials and the business?
Key Findings: Capability & Capacity Risks
6© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Global Talent Risk Profile
and
Highest Ranked
Capacity and Capability risks dominated both in terms of perception and mitigation of risk
Least likely to be ranked
Compliance talent risks was the most likely risk category to be listed as no risk at all by about 38% of the survey population
7© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
21%
18%
32%
20%
6% 3%
We do not have succession plans
Not at all effective, lists with no action
Somewhat effective, lists with regular action
Very effective, succession planning discussions
Extremely effective, actively work with succors
I don’t know
‘An insufficient pipeline of future leaders’ ranks as #1 talent risk and yet few organizations have effective succession planning in place...
Effectiveness of Succession Planning
8© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
26% of organizations filled less than 25% of their Critical Roles with internal candidates
26%
22%20%
13%
10%
9%
Less than 25%
26% to 50%
51% to 75%
76% to 90&
More than 90%
I don’t know
Percentage of Critical Roles filled with Internal Candidates in last year
9© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
8%
22%
35%
25%
7%4%
No strategic workforce planning
Basic approach
Simple approach
Detailed approach
Complex approach
I don't know
Respondents were not optimistic about their approach to strategic workforce planning ....
Approach to strategic workforce planning.
10© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Big challenges for talent management
Organizations take a narrow view of talent management 1
2
3
■ There is a strong focus on the ‘traditional’ areas of talent management – capability and capacity
■ This is coupled with a relative lack of concern about connecting and engaging with talent as well as enabling and encouraging collaboration
Insufficient focus on total cost of workforce 2
■ There are a number of talent risks which appear in the list of top 10 risks identified but do not feature in the list of top 10 risks actively being managed:
■ Managers view performance management and talent review processes merely as something to comply with, rather than a business critical activity
■ Business leaders’ inability to engage with, motivate and nurture business critical talent
■ An insufficient budget for managing and developing talent
■ Maintaining employee engagement in the face of a less committed, more flexible workforce
Key Findings: Connection-related talent risks
12© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
A surprising lack of concern about connecting and engaging with talent…
No concern? The survey showed talent managers are relatively unconcerned about:
■ International mobility policies and processes making it difficult to transfer talent between countries
■ A lack of diversity in the workforce
■ Business leaders’ reluctance to share talent across the organization
■ Business leaders’ inability to engage with, motivate and nurture business critical talent
13© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
In addition, effort does not appear to be expended consistently in such a way as to address the top 10 risks identified…
Bottom of the list
Respondents ranked the risks of their ‘business leaders inability to engage with, motivate, and nurture business critical talent’ as a top ten critical risk – yet awarded it fell to almost the bottom of the list of risks that were least actively managed
33% Only 33 percent of respondents felt their business unit leaders were ‘incentivized to share talent across organizations for the benefit of the business and the talent – seemingly at odds with the inclusion of development, retention and several other risks within the top 10 risks.
and
14© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Talent Review Processes are also not used effectively as an engagement driver...
Do your organization’s formal talent review meetings result in development plans for which leaders take responsibility?
Key Findings: Cost-related talent risks
16© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
24%
38%
27%
11%
No
Yes, in a limited scope
Yes, extensively
I don’t know
Over 60% of organizations do not track total cost of workforce at all, or use it only in a limited scope...
Does your organization use 'Total Cost of Workforce' as a key metric?
What does this mean for Canadian companies?
18© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
What does this mean for Canadian companies?
■ Retention continues to be a key concern consistent with last year’s KPMG’s global survey – Canada rated this the #1 Challenge in the Rethinking Human Resources in Changing World Survey
■ Survey reports organizations are downplaying talent risks in the areas of connection, diversity and performance management
■ Lack of emphasis on “connection” is a concern given the nature of work today as well as the entry of younger generations into the workforce
■ In Canada, downplaying Diversity has increasing importance with the recent announcement from the Ontario Securities Commission requiring companies to annually publish a description of their diversity policies. This new standard is the first of its kind in Canada and will likely be the catalyst for change in diversity in many organizations.
■ Cost as a driver/concern is best considered a more balanced view of talent needs and challenges
■ The survey points to a difference of opinion between HR and line Managers about talent needs and priorities
19© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Hardwire talent risk into wider enterprise
risk management frameworks
Final Thoughts: Organizations must embrace a more holistic approach to talent management
Holistic Approach
20© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Final Thoughts: Organizations must embrace a more holistic approach to talent management
Holistic Approach
Build a talent strategy based on an
understanding of what the organizations
needs to win in the future
Pause to consider whether all major
talent risks have been identified & prioritized – does the business
agree?
Work with leadership to connect and
engage with talent across the
organization
Embed strategic & holistic talent planning into
business planning – it’s not a standalone
exercise
Seek to understand and track the total
cost of workforce
Evaluate talent-related decisions
for return on investment
Hardwire talent risk into wider enterprise
risk management frameworks
Contact KPMG in Canada to continue the conversation
www.kpmg.ca/talentrisk
Visit us at kpmg.ca/talentrisk
kpmg.com/socialmedia
© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.