Completing the Talent and HRO Formula

Consider a 'Periodic Table of Talent' as a roadmap for strategizing your future talent plans.

by Jeff Schwartz, Michael Stephan, Brian Noble

The people challenges facing organizations and HR executives are growing as business markets are increasingly turbulent. Conditions in the global financial system add to a talent crisis that is already underway as baby boomers begin retiring this year. Add in the economic slowdown, rising energy costs, a competitive global talent market, and the widening skills gap, and it’s clear that businesses face tough decisions.

One intersection of these issues today is how companies formulate options that address the dual challenges of talent management and HR operations. HR outsourcing remains a key solution for improving operational efficiencies. Yet, remember that while you can outsource specific HR activities, you cannot outsource your talent and HR strategies.

Building A Framework
We believe that a challenge of this scale requires new thinking—a reframing of central questions. The urgency of the talent crisis has caused many executives to jump in and start fixing things. However, with the scope, effort, and investment in talent and HRO companies are likely to make, we propose that you take a different approach, one that gives you a broader range of potential actions.

Often, talent discussions focus exclusively on elements of the employee lifecycle – recruitment, onboarding, development, performance management, and succession planning. Many HRO decisions focus intrinsically on HR operational efficiencies, technology, and underlying costs. Certainly, you can outsource recruiting or learning without understanding your critical workforce segments or generational strategy. Yet, doing so might minimize the value delivered to the broader organization. Worse, it may cost more down the road when you integrate specific talent strategies.

Working with clients on talent management and HRO issues, we have developed a framework for exploring the linkages between talent strategies, solutions, and infrastructure. It can also be used to inform and guide HRO initiatives, whether or not you already have HRO programs in place. We call this framework the Periodic Table of Talent (Fig. 1).

Figure 1: Periodic Table of Talent

This framework helps put up for consideration the many different challenges relating to talent. The talent agenda is broader than the core employee lifecycle, extending to include both work-based and organization-based solutions. Talent and work solutions are driven by business strategies and can (and should) differ widely from one company to the next. As a result, innovation is as important in talent markets as it is in customer markets, and the infrastructure to enable talent strategies, solutions, and innovation goes far beyond core HR technology platforms.

Explaining the table
The Periodic Table of Talent may conjure up memories of high school chemistry class, but look further and you’ll find it can offer formulas as understandable as H2O and CO2.
The table comprises four broad categories of human capital and talent management priorities and activities. Appropriately, the initial focus is on strategy.

For a talent management strategy to be effective, it needs to be tied directly to your business strategy and objectives. Elements of the framework’s strategy section can help you develop a talent roadmap and establish the key metrics. Look closely and you’ll see that many of those same elements are central to evaluating your HR service delivery model. The combination of your HR strategy, the metrics behind your business case, and alignment with the business will help you determine the role of HRO.

Based on strategic decisions and priorities, you can use solutions to tie them directly back to the elements of strategy. Some solutions focus on talent issues such as employee recruitment and career development. Others focus on work issues such as knowledge, mobility, and job design—the what, when, where, and how of work.

As you decide which elements are core to your talent strategy, you can evaluate what remains in-house versus what might be a candidate for outsourcing. Regardless of the strategy employed, the talent-focused and work-focused talent solutions—along with responsibilities for each type of solution—must be highly integrated between HR and the business.

Catalysts are the third category. Catalysts, such as transforming rewards programs and establishing employee value propositions, have special potential to accelerate performance by redefining talent priorities and driving differentiation. HRO is a differentiator in its own right. It presents an opportunity to transform your HR service delivery model, shift focus to the business, and improve the end-to-end employee experience. So it’s important to consider the possibility of leveraging the innovative infrastructure of your HRO as a platform for driving talent differentiation.

Infrastructure comprises the service delivery mechanisms, processes, roles, and technology of talent management. While some or much of the infrastructure needed to support talent-focused and work-focused talent solutions may already be in place, you may still need technology upgrades, enhanced communication, expanded employee services, and the ability to integrate talent solutions.

To see how the table works, consider that your organization has identified a critical workforce segment in which retention is lagging and the time it takes to fill jobs is higher than average; yet the causes are unknown. This may be a sign that you need a “compound” of improved workforce intelligence, updated applicant experience, and more effective recruiting technology or processes. Whether you are an existing or potential customer of HRO, you might consider how a provider can help you address these challenges through an integrated infrastructure. Clearly an understanding of these challenges early on can enrich your HRO decisions.

Science lessons teach us that combining elements can produce powerful compounds—CO2, for example. Unlike CO2, however, HRO is not a perfect compound. There is no one-size-fits-all or any indication that HRO is a must-have component of an evolved HR service delivery model. Yet the options surrounding HRO create flexibility in how you employ infrastructure to support your talent solutions, which often gives HRO a compelling value proposition.

It’s also why many organizations are now expanding their outsourcing strategies to include talent solutions. When talent elements emerge as core to an organization’s strategy, there needs to be a holistic, integrated view of all aspects of managing talent.
As organizations are pressured to boost employee productivity and customer revenue generation, key metrics like time to fill, time to competency, and time to succeed become top of mind. So regardless of which “compounds” you create from the elements of the table, HRO could provide advantages through the acceleration of time to implement, lower costs to operate, and innovative technology solutions.

Building and maintaining the strong enterprise talent you need will only grow harder as competition for talent intensifies and the availability of key skills tightens. In this environment, more than scattershot action is required. Consider all the elements of the equation as you formulate your future HR service delivery model. No one said it was going to be easy. However, by applying an integrated framework for talent and HR decisions and fully exploring the opportunities to leverage HRO as part of your talent strategy, your organization can gain advantage in an increasingly competitive talent marketplace. HRO

Michael Stephan and Jeff Schwartz are principals and Brian Noble is senior manager with Deloitte Consulting LLP.