A Systems Approach to Talent Management: Integrating Strategic Human Resources Justin Jones University College University of Denver Capstone Project For Master of Professional Studies February 19, 2007 __________________ Robert Melvin Capstone Advisor __________________ Denise Pearson Academic Director Upon the Recommendation of the Department __________________ James R. Davis Dean Jones-ii ABSTRACT This Capstone Project applies systems theory to strategic talent management in a large, multinational firm. The systems lens enables the organization to discover and leverage the strategic value of its talent in a sustainable manner. In today’s complex business environment of continual change and compressed time, Human Resource initiatives are often pushed aside as superfluous “people stuff.” However, as the global economy shifts from the Age of Industry to the Age of Information, the constrained resource holding the greatest promise for sustainable business performance is similarly evolving from financial to human capital. The systems view of this Project facilitates a deeper understanding of the value inherent in recruiting, developing, and retaining critical talent. Jones-iii TABLE OF CONTENTS ABSTRACT ............................................................................................ii INTRODUCTION ..................................................................................... 1 Goals and Objectives ..................................................................... 4 Benefits ......................................................................................... 6 REVIEW OF LITERATURE .......................................................................... 7 DESIGN AND IMPLEMENTATION............................................................... 30 RESULTS ........................................................................................... 41 Structural Elements. .................................................................... 41 Employer Brand ........................................................................... 50 Project Outcomes. ....................................................................... 52 DISCUSSION ...................................................................................... 53 AREAS FOR FURTHER RESEARCH ............................................................. 59 REFERENCES ...................................................................................... 60 APPENDIX A ...................................................................................... 67 APPENDIX B....................................................................................... 68 Jones-1 INTRODUCTION In many respects, the future of Alpha Company (AC), a large international firm, could not be brighter. AC has a track record of awardwinning performance and continued growth, with 2005 revenues and total number of employees jumping twenty-three and twenty-six percent respectively. The momentum of AC’s size and its strong reputation in the industries it serves position the firm to bid on and win an ever greater number of multi-billion dollar projects of which there is no foreseeable shortage. In addition to promising external market opportunities, AC also benefits from a highly satisfied internal workforce. The firm has repeatedly won prestigious awards for being one of the best American companies for which to work. In 2006, AC was once again ranked among the top 100 U.S. firms for providing a positive work environment. Thus, with future growth a virtual guarantee and a reputation both for quality work and for high employee satisfaction, AC’s goal of doubling its size again in the next five years appears entirely within reach. However, there is a small tear in the canvass of this future portrait that could well unravel the designs of the firm: AC is unable to hire and retain enough skilled workers, or talent, to fulfill its current and future project obligations. A recent internal report revealed that AC had nearly 1,500 openings for new employees, over half of which were taking more Jones-2 than sixty days to fill. The combination of a worker shortage and a slow hiring rate hampers AC’s ability to begin work on projects for which it has already been awarded contracts and could easily preclude the company from undertaking future projects. In terms of retention, AC has a total voluntary turnover rate of nine percent, an admirably low figure. Yet among new hires with less than three years’ tenure, the annual turnover rate is twenty-seven percent, or three times the company-wide total. This higher churn rate of new employees further fuels AC’s worker shortage problem by adding to the total number of open positions. In addition to replacement costs, turnover is surprisingly expensive when considered in a broader sense. Many scholars (Ashby & Pell 2001; Barrow & Mosley 2005; Hubbard 2004; Sears 2003) assert that turnover costs should be calculated at one and one-half times the annual salary of the departed worker in an effort to account not only for all the direct costs associated with hiring replacement employees but also for the indirect costs attributed to lost productivity. Given that a significant portion of AC’s workforce is comprised of engineering and science professionals, one might assume, for example, that the firm pays an entry level mechanical engineer a salary equal to the national average starting salary of $53,500 (NACE 2006). Turnover costs for each separated engineer would therefore exceed $80,000. Using this hypothetical figure as an average cost, AC would lose $1 million for every Jones-3 twelve and one-half employees who leave the company. Or, assuming that twenty-seven percent of the 1,500 pending new hires opt to leave AC within their first three years of employment, turnover costs for these employees could easily exceed $30 million. While alarmingly costly, this rate of new hire turnover is actually comparable with other companies surveyed in a recent Business Week (2006) study. The resulting article, entitled “Best Places to Launch a Career,” identifies the top fifty U.S. companies based on their efforts to attract college graduates. Among these firms, the average rate of turnover for employees within their first three years was approximately thirty-three percent. AC may take some comfort in knowing that its new hire turnover is on par with other organizations. However, its talent shortage problem is uniquely exacerbated by the fact that engineers and scientists in particular are in increasingly short supply. In a recent report for the American Society for Engineering Education, Michael Gibbons (2005) notes that the number of U.S. engineering college graduates has been in steady, overall decline since the early 1990s. Gibbons notes that based on current college enrollment figures, the number of graduating engineers will continue to decline in years to come. As for science graduates, the National Science Foundation (2006) projects a slight increase in the total number of science degrees awarded but Jones-4 adds that the slow increase will not keep pace with explosive labor market demand. Thus, AC’s talent shortage problem will most likely worsen if the company does not take decisive action. Fewer engineers and scientists will be available to enable the firm to take advantage of the abundance of major global projects. Careful, systematic consideration of AC’s complex talent issues is needed in order to help the organization understand and overcome the constraints that threaten to darken its otherwise bright future. Goals and Objectives. The primary goal of this Capstone Project was to determine the talent management issues contributing to AC’s U.S. workforce shortage. To accomplish this, the Project applied a systems framework as the optimal strategic lens through which to understand and influence talent management toward optimal business outcomes. Systems theory, a foundation of organization development, recognizes an organization as a complex open system, created and sustained by interrelated forces operating both within and outside its organizational boundaries (French & Bell 1999). In the case of AC, multiple external and internal system forces were considered in terms of their influence on the firm’s ability to leverage talent toward desired business success. Throughout this Project, “talent management” refers to the collective practices of strategic human resource (HR) management such as recruiting, on-boarding, performance management, compensation and benefits, rewards and recognition, development, and retention. Instead of focusing Jones-5 narrowly on talent management practices in a given organization, a systems view of talent management offers a more holistic perspective yielding greater strategic value. This holistic view encompasses not only the myriad talent management practices listed above but also such internal forces such as organizational culture and strategy. Additionally, external forces influencing the organization, like the number of workers available and changing American worker values, are reviewed. To the degree organizations understand the totality of complex systems influencing their talent resources, they become better able to make talent decisions resulting in optimal outcomes. Systems scholar Peter Senge writes of such systems in terms of “structures”: “Systems thinking is a discipline for seeing the ‘structures’ that underlie complex situations…” (1990, 69). In other words, AC’s worker shortage problem represented only the visible tip of a much larger organizational iceberg. In order to solve AC’s worker shortage problem effectively, this Project considered the deeper internal and external structures lurking below the surface. A specific objective given for this Project by AC, was to determine employer brand themes that could be used to attract new talent through targeted recruiting efforts. The concept of an employer brand is fairly recent, with initial work on the subject dating back to the early 1990s in the United Kingdom (Barrow & Mosley 2005) and to the mid-1990s in the U.S. (Hornung 2006). Tim Gibbon defines employer brand as a complex Jones-6 relationship that “is influenced by all of the employment touch points that exist between an organization and its employees, current and potential” (2004, 39). D. Mark Hornung similarly summarizes employer brand as “the relationship between the employer and the employed” (2006, 1). To paraphrase, an employer brand represents the sum total of the thoughts and feelings that exist in the minds of current and prospective employees based on their experiences with and impressions of employer organizations. Just as a product’s brand exists in the mind of consumers based on all the possible interactions, or touch points, consumers might have with a product, so does an employer brand exist in the minds of employees based on the whole of their work experience. Thus, in addition to researching AC’s talent management and other organizational systems, this Project utilized employer brand best practices to deliver brand themes that could be used in recruiting messages. The systems framework of the Project informed both employer brand and recruiting initiatives toward more integrated and optimal outcomes. Benefits. This Capstone Project is intended to benefit several entities. The Project aims to deepen AC’s ability to understand and address systemic issues in order to solve its U.S. worker shortage problem effectively. Additionally, the Project intends to provide the organization with a distilled list of employer brand themes for use in attracting and retaining talent. This Capstone also aims to benefit University College as a reference for other Jones-7 researchers and organizations seeking to address similar issues. Further, the Project hopes to serve as a model of an Organization Development project through its systems approach. Finally, this Capstone builds my professional experience as an Organization Development consultant. REVIEW OF LITERATURE Upon completing a review of the literature, I found that the vast majority of scholars and HR practitioners do not write of talent management in systems terms. Yet they frequently and unknowingly imply a systems approach, at least in part, through their consideration of multiple external and internal structures affecting talent and business outcomes. Perhaps the best place to begin a review of the pertinent external factors considered by researchers is with the McKinsey and Company consultants who first coined the phrase commonly used to describe today’s shortage of skilled workers: “The War for Talent” (Michaels et al. 2001, x). Ed Michaels, Helen Handsfield-Jones, and Beth Axelrod explore several external, or environmental, workforce issues that have created what they term a competitive “war” for skilled employees. First, they consider the global economic shift from the Industrial Age to the Information Age through which intangible assets such as knowledge and worker performance have come to represent greater economic value than more tangible, industrial assets such as machines and factories (Michaels et al. 2001). Here they echo Peter Drucker’s description of the Jones-8 emerging importance of the “knowledge worker” (1999, 18): “The most valuable asset of a 21st-century institution…will be its knowledge workers and their productivity” (1999, 135; italics in the original). With a significant portion of an organization’s value residing among the tacit skills and knowledge of its employees, worker productivity—or the extent to which individuals apply their skills and knowledge to an organization’s benefit— becomes paramount to business success. In addition to a change in the global economy, the McKinsey consultants consider U.S. Bureau of Labor Statistics (BLS) indicating that the number of available workers aged twenty-five to forty-four, which the authors view as the prime source for future talent, will decline through 2008 (Michaels et al. 2001). They therefore make dire predictions in terms of significantly decreased available workers. Such demographic forecasts are an interesting point of debate among researchers. The majority share the McKinsey concern by pointing to the eminent retirement of the large Baby Boom generation followed by a significantly smaller baby “bust” generation— Generation X (GenX)—resulting in a severe labor shortage (Arthur 2006; Dychtwald et al. 2006; Hankin 2005; Losey 2004; Sears 2003) . David Sears (2003), for example, also cites U.S. BLS statistics and finds that the number of available U.S. workers will continue to decline until 2018 with a total shortage of 12 million workers. Jones-9 On the other side of the demographic issue, Peter Cappelli (2004) presents a case against the looming labor shortage using the following arguments: the larger Generation Y (or Echo Boom generation) is already entering the workforce, thus bolstering the smaller GenX pool; the majority of Boomers will delay retirement due to inadequate financial savings; the increasing number of U.S. immigrants provides additional workers; the overall number of college graduates is on the rise, providing increased skilled labor; U.S. workers are more productive with fewer people producing more than ever before; and, finally, thanks to globalization companies can offshore increasing portions of work. Cappelli therefore concludes there will be no labor shortage. Michael Losey addresses several of Cappelli’s arguments and arrives at a view that encompasses both sides of the demographic debate. First, while the majority of Boomers may not be in an ideal financial position, Losey (2005) cites a 1999 World Health Organization study that ranks the U.S. last among developed countries in terms of the Disability Adjusted Life Expectancy (DALE). The DALE places U.S. healthy life expectancy, during which a person is capable of work, at sixty-nine years. Losey therefore argues that many Boomers will not be physically capable of working much past the traditional retirement age, regardless of their financial position. More importantly, Losey, along with Ken Dychtwald et al. (2006), finds that while the total number of U.S. college graduates is indeed on the rise, there Jones-10 is a general downward trend among engineering and other technical degrees. Also, the vast majority of U.S. immigrants consists of low-skilled labor. Thus, Losey concludes that the U.S. will simultaneously experience both a labor surplus and a labor shortage—a surplus of unskilled labor and a progressively severe shortage of skilled workers. This finding accurately captures the dilemma faced by AC, as it struggles to attract and retain qualified engineering and scientific talent. Aside from the sheer size of the U.S. working population, there are two additional demographic trends of interest that the McKinsey consultants do not address in detail: the U.S. education system and changing worker values. James O’Toole and Edward Lawler III provide the most complete analysis of education and the economy in the U.S. in The New American Workplace (2006). Their book reiterates an earlier study written by O’Toole in 1972 for the U.S. Secretary of Health and Education, and the comparisons of American workplace trends between the 1970s and today are quite revealing. Like Michaels et al. (2001) and Drucker (1999), O’Toole and Lawler consider advancements in technology, globalization, and renewed focus on worker performance as evidence of a new era, which they term “the dawn of the Age of Human Capital” (2006, 35). In this new age, human productivity becomes a business’ most precious resource. However, to this assumption the latter authors are careful to add the conditional phrase “if [workers] are Jones-11 properly educated” (O’Toole & Lawler 2006, 35; italics in the original). O’Toole and Lawler link the nation’s educational system directly to its overall capacity to produce economically. They note that since 1973, U.S. productivity has slipped from its dominant world position to eighth place among industrialized countries. While they agree that the U.S. still has the largest economy, they posit that productivity is “the single clearest indicator of a nation’s economic health” (O’Toole & Lawler 2006, 38). For these researchers, declining economic health is symptomatic of deteriorating education in the U.S. O’Toole and Lawler (2006) go on to describe a widening economic gap among Americans that largely follows educational lines. They find that wages for unskilled labor have remained largely unchanged since the 1970s and, when considering inflation, have actually decreased. Further, they note that ninety percent of today’s jobs are non-manufacturing in nature and that the 20 million new jobs projected over the next eight years will virtually all require at least a Bachelor’s degree. As fewer Americans possess the resources to obtain higher educations, they argue, the pipeline of skilled labor will continue to decline in a circular and self-perpetuating fashion. Given these trends, O’Toole and Lawler (2006) urge businesses to facilitate education reform in K-to-12 public schools and to encourage more students to study engineering, math, and other technical fields. These recommendations are shared by other scholars. Franklin Ashby and Arthur Jones-12 Pell (2001) advocate that companies give serious consideration to grooming future employees by sponsoring middle school, high school, community college, and four-year college programs. In Workforce Crisis, Dychtwald et al. (2006) similarly propose a preemptive educational strategy in order to shore up the talent pipeline. As for external forces driving shifts in American worker values, researchers point to a number of causes. Generational scholars Bruce Tulgan (2004), along with Ron Zemke, Claire Raines, and Bob Filipczak (2001), point to the fact that there are today, for the first time, four distinct American generations working together. Zemke et al. in particular note that not only are there more generations in today’s workforce than in the past but that these generations are working together in unprecedented ways. They emphasize that today’s flattened, reengineered companies create a less hierarchical work environment in which a sixty-something employee is far more likely to work closely with a twenty-something employee. Tulgan (2004) and Zemke et al. (2001) classify the four generations as Silents (or Veterans), those born between 1922 and 1943; Baby Boomers, born between 1944 and 1960; Generation Xers, born between 1960 and 1980; and Generation Yers (or Echo Boomers), born between 1980 and 2000. Based on shared life experiences, each generation develops unique values the authors believe must be managed effectively in order to attract and retain necessary talent. Jones-13 Silents, having mostly worked for a single employer throughout their careers, tend to value loyalty and hierarchy and believe if they work hard their contributions will be rewarded (Tulgan 2004; Zemke et al. 2001). Boomers, who began their careers improving on Silents’ work ethic by inventing the eighty-hour work week, have since largely become disillusioned by the rampant downsizing of the 1980s and 1990s and increasingly are seeking greater work-life balance. Generation X grew up witnessing the “betrayal” of their Boomer parents by employers, as their parents lost jobs for which much had been sacrificed—including time spent with their GenX children. GenXers, like their Boomer parents, are also more concerned with work-life balance as well as independence. Finally, Generation Y has benefited greatly from a renewed parental interest among younger Boomers and older GenXers. They therefore exhibit a great deal of optimism and an unprecedented expectation that employers will help them find success on the job through the same level of coaching and attention their parents provided. While Tulgan (2004) and Zemke et al. (2001) posit that each of the four generational needs should be understood and managed to retain talent, Leon Martel splits American workers into two halves which he calls the “materialists” and the “postmaterialists” (2002, 7). He cites a World Values Survey demonstrating that with increasing economic wealth and security—as societies shift from industrial to post-industrial economies—peoples’ Jones-14 concerns for material wealth and security similarly shift toward “’selfexpression, subjective well-being, and quality of life issues’” (Martel 2002, 7). For Martel, the vast majority of today’s workers fit the postmaterialist model. Therefore values such as improved work-life quality are more widespread and are not limited to specific generations. Although Martel does not make the connection, his theory is much in line with psychologist Abraham Maslow’s hierarchy of needs. Maslow (1943) also theorized that as a person’s more basic needs such as security and health are met, higher order needs like self-esteem and creativity become increasingly important. Martel’s postindustrial workplace offers greater opportunity for postmaterialist workers to pursue these needs. In an earlier book entitled Winning the Talent Wars, Tulgan (2001) more closely embraces Martel’s perspective on worker values by placing them in the context of overarching workplace trends as opposed to generational differences. Here, Tulgan describes a revolutionary shift in the American employer-employee relationship shaped by the downsizing, restructuring, and reengineering in the 1980s and 1990s. As a result of these events, “Employers disavowed themselves of their obligations to employees with respect to job security and sent a loud and clear message that individuals must take personal responsibility for their own careers” (Tulgan 2001, 25). While Tulgan admits this shift was initially difficult for displaced workers who had to learn to market themselves, he celebrates the Jones-15 transition as a “revolution [that] worked like a charm” (2001, 56) in that the balance of power shifted from employers to employees and created a free employment market. In this new market, as Tulgan succinctly puts it, “Talent is the show” (2001, 31). In Tulgan’s new economy, knowledge workers have been relieved of their sense of loyalty to any one company just at the time that companies and employees alike are realizing that talent is the key ingredient to business success. The resultant changes in worker values create a new environment for both the American worker and employer. This new employment deal gives employees more leverage with which to bargain for greater work-life balance and for professional opportunities coveted by all worker generations. The new employment landscape represents a culmination of previous external system elements reviewed, including the transition from the industrial to the information age, the criticality of worker productivity, the number of available skilled workers, changing worker values, and the conversion to a free employment market. This concept of a new employment landscape is also the final external structure considered by the McKinsey consultants. Michaels et al. (2001) cite Peter Cappelli’s book The New Deal at Work (1999) and agree with his thesis that employers no longer control the new employment deal and that, instead, talent has become a seller’s Jones-16 market. These authors find that the new employment deal requires significant changes to internal talent management practices. The McKinsey consultants begin their shift in focus to internal talent structures by recommending that business leaders first “[e]mbrace a talent mindset” (2001, 11). The notion of leveraging change by first shifting one’s thinking is reminiscent of Senge’s thesis that organizational “problems originate in basic ways of thinking and interacting, more than in peculiarities of organization structure and policy” (1990, 27). From this initial insight, however, Michaels et al. (2001) quickly diverge toward a non-systemic line of thinking. If productive talent provides competitive advantage in the Information Age, they argue, then organizations must strive to identify and retain only their top talent and remove weaker performers. Their philosophy is known collectively as topgrading. In The War for Talent (2001) and in a later Harvard Business Review article (2002), Michaels et al. recommend that employers classify their employees according to skill and performance level into three categories: A, B, and C players. A players, the strongest performers, are to be lavished with career development opportunities and special compensation considerations. B players are to be encouraged to strive toward A player status. C players, though, are to be managed with “an iron fist and velvet gloves” (Michaels et al. 2001, 84), meaning if they are unable to improve skills and performance they are to be dismissed. Jones-17 This perspective takes a narrow, more transactional view of employment, a perspective which Tulgan (2001) shares. The underlying assumption these authors make is that in the free talent market employees are solely concerned with earning money and individual growth. In this environment, they argue, employers should view internal talent management systems solely as tools for negotiating employment for top performers in exchange for work accomplished. As Tulgan phrases it, “Stop paying people and start buying their results” (2001, 83). O’Toole and Lawler agree that “basic economic resources…and the opportunity to grow and develop” are critical human needs vis-à-vis work (2006, 8). However, they also recognize a third element of employment: “the need for supportive social relationships” (O’Toole & Lawler 2006, 8). For them, there is a social human element in the employment contract that cannot be as easily negotiated. Anne Tsui and Joshua Wu criticize the McKinsey-Tulgan approach to talent management, calling it a “contract-like economic exchange” (2005, 45). They believe that productivity rests on the boundary between employer inducement and worker commitment and recommend that, in the new employment landscape, both sides mutually commit to the relationship in order to engender sustainable performance. They refer to the McKinseyTulgan model as a “quasi-spot contract” (2005, 46) which can only yield Jones-18 short-term performance gains but which ultimately disenfranchises employees and diminishes productivity. In a more direct critique of the McKinsey topgrading model, Thomas DeLong and Vineeta Vijayaraghavan (2003) champion the cause of the B player. They find that A players are more likely to focus on “Brand Me,” concerning themselves only with their own careers at the expense of their employers and peers (DeLong & Vijayaraghavan 2003, 98). B players, on the other hand, are typically strong performers who are often more concerned with work-life balance. They may even consist of former A players disillusioned by the pace of the fast track. DeLong and Vijayaraghavan recommend executives give more attention to these unsung heroes who provide dependable, if not flashy, performance. I find the chief weakness of the McKinsey-Tulgan perspective in terms of driving optimal business outcomes to be the myopia of their systems sight. While they carefully consider external structures affecting talent management, they ignore relevant internal systems such as cultural influences. Thus the question remains of how best to leverage talent management in the face of the new employment landscape and relevant internal structures. In their quest to define talent management, Robert Lewis and Robert Heckman (2006) note that the term itself has only recently emerged. They posit that in order to merit this new moniker, “talent management” must Jones-19 represent something of greater strategic value than has existed in the past. To ascertain this incremental value, they conduct a critical literature review and find that prevailing definitions of talent management can be summarized in three perspectives: as a compilation of familiar HR disciplines like recruiting and development, as succession planning, or in a more generic sense as the overall management of employees. With regard to the latter management perspective, Lewis and Heckman (2006) find two competing views on how talent can be managed: according to performance level, or with the intent of developing the performance level of all. The former is exemplified by the McKinsey (2001) preference for topgrading and the Tulgan (2001) and Cappelli (1999) predilection toward a more contractual relationship based purely on performance results. The universal development model takes the opposite view such that, due to the free market value of talent, organizations must invest in all people equally in order to remain competitive. O’Toole and Lawler are strong advocates of the universal development model, endorsing a “High-Involvement” organization (2006, 152). In a HighInvolvement (HI) organization, talent management systems such as compensation, benefits, work arrangements, and development are typically more generous and flexible. Additionally, performance management and leadership styles tend to be more participative in order to make all employees feel valued as members of the organization. In return for such Jones-20 generosity and transparency, worker commitment to company objectives is heightened. O’Toole and Lawler find this model to be “the most economically productive and most likely to satisfy the basic needs of workers” (2006, 152), a win-win proposition. Other proponents of this universal model organize internal talent management within the context of the organization’s culture. Jim Harris and Joan Brannick (1999) believe that culture is the primary tool that can connect employees to each other and to the organization. They recommend companies first define a core culture that best fits their business model and offer four cultural categories: customer service, innovation, operational excellence, and spirit. Interestingly, they describe the latter spirit category as “[t]he fastest growing core culture” through which companies consider employees as more important than customers or even financial performance (Harris & Brannick 1999, 14). Once the core culture is determined, they emphasize the importance of aligning talent management with it in order to drive optimal performance and retention. A third group of universal development proponents emphasizes the employee-supervisor relationship. Fredric Frank, Richard Finnegan, and Craig Taylor expand on the importance of individual attention with regard to supervisory relationships in their 2004 article “The Race for Talent: Retaining and Engaging Workers in the 21st Century.” They cite a 2003 Society for Human Resource Management study finding that a shocking eighty-three Jones-21 percent of surveyed workers indicated they intended to leave their jobs in search of better opportunities once the economy improved. The authors posit the primary reason for this pervasive dissatisfaction lies with immediate peer and supervisor relationships. This theory is shared by Gallup researchers who, after studying thousands of managers and employees, conclude that workers join companies but leave their immediate managers (Buckingham & Coffman 1999). Lewis and Heckman (2006) discount both performance-based and universal talent management approaches for being non-strategic. On the one hand, they find the topgrading approach ignores the possibility that for some organizational roles C-level performance may be adequate. The expense associated with hiring and retaining only top talent may therefore be unnecessary. As for the universal development model, they acknowledge the good intention of developing everyone equally but are critical both of a lack of clear guidance for determining the level of resources to be invested and of the basic assumption that all talent is equally valuable to an organization. For Lewis and Heckman, “managing each person’s talent so that it is fully actualized” is a non-strategic deployment of a business’ limited resources. (2006, 142). O’Toole and Lawler (2006), in spite of their clear support of HI organizations, do acknowledge that such models are not always advantageous. In particular, they articulate risks including “a loss of Jones-22 operational flexibility due to the time it takes to alter a workforce’s mix of skills and capabilities; employee resistance to major changes in strategy, technology, and products; and the creation of a sense of dependency on the organization” (O’Toole & Lawler 2006, 153). Thus, depending on the strategy of a business, another key system structure, universal development may not provide optimal outcomes. The second perspective of talent management listed by Lewis and Heckman pertains to succession planning, which they define as “projecting employee/staffing needs and managing the progression of employees through positions” (Lewis & Heckman 2006, 140). Through succession planning, HR leaders are primarily concerned with getting the right talent in the right place at the right time. In “Growing Talent as if Your Business Depended on It,” Jeffrey Cohn, Rakesh Khurana, and Laura Reeves (2005) study companies with best practice succession planning programs. They find that succession planning drives leadership development by first identifying key management positions needing to be filled. Next, the skills and knowledge needed for such roles are ascertained, and these findings are shared transparently throughout the company, thus fostering open dialogue about how workers could develop themselves according to their interests and to business needs. Cohn et al. find this process effective for increasing worker commitment and retention by “exposing future leaders to the full range of the company’s operations” (Cohn et al. 2005, 68). Through Jones-23 transparent succession planning, all organization members can discover ways to enhance their contributions to defined business objectives. Perhaps the most detailed of succession planning and leadership development programs is Ram Charan’s, Stephen Drotter’s, and James Noel’s leadership pipeline (2001). Based on earlier work pioneered by Walt Mahler in the 1970s, Charan et al. pay particular attention not only to the skills needed for different leadership levels, but also to differing time management and work value concerns at those levels. For example, as an individual progresses from a frontline position to a level in which she manages others, she must spend less time doing tactical work herself and more time coaching others on their performance. Importantly, the newly promoted manager must also learn to value coaching as the work most critical for her success and for the success of those she manages. She must therefore learn to de-value doing the tactical work herself. These authors also make clear that a necessary component to the achievement of an effective succession planning program is the transparency of the process that allows workers to understand and align their development needs and performance to those of the business. Yet, as a definition of talent management, Lewis and Heckman find that succession planning also “fails to advance the theory or practice of HR” (2006, 141). For Lewis and Heckman, labeling succession planning as talent management is Jones-24 an obvious attempt to give an existing practice a more strategic frame of reference without making any real changes to the practice itself. They make the same critique of their first category of talent management as a collection of traditional HR practices such as recruiting, compensation, and development, finding this view of talent management to be equally superfluous. Ashby and Pell (2001) champion this last model of talent management, proposing that companies implement best practices within disciplines such as hiring, compensation and benefits, new employee on-boarding, exit interviews, and leadership coaching. For these authors, hiring best practices include a realistic job analysis, automated prescreening, and behavioral interviews that probe into past accomplishments. In considering compensation and benefits, they suggest organizations provide equitable compensation and find creative ways to recognize people both through monetary and non-monetary means. They provide a detailed analysis of optimal on-boarding techniques, recommending that new hires be given significant and achievable objectives for the first ninety days and that serious attention also be given to developing social networks (Ashby & Pell 2001). Exit interviews are described as crucial opportunities for organizations to learn about what compels workers to leave. Finally, these authors echo Frank et al. (2004) by finding that approximately half of employees’ work-life satisfaction is attributable to the relationship they have with their immediate managers. Jones-25 Thus, they recommend planned coaching of supervisors to help them discontinue authoritative styles of leadership in favor of participative styles. For Ashby and Pell (2001), talent management means ensuring that best practice HR disciplines align with business strategy and organizational culture. Dychtwald et al. (2006) similarly recommend that HR practices align with business strategy. In particular, they recommend employers implement flexible work arrangements like flex-time, reduced time (such as job sharing or part-time work), and allowing more work to be done from home. Lewis and Heckman (2006) agree that such HR programs can be strategic to the degree they align with business needs and the contemporary employment landscape. Yet, for them, this understanding of HR practices does not necessarily constitute a groundbreaking development worthy of the new talent management moniker. The opportunity they identify is for talent management to undertake a more forward-looking, integrated perspective in leveraging talent. In other words, talent management must “shape organizational strategy, not simply respond quickly to the implications of strategy” (Lewis & Heckman 2006, 145). Rather than reacting to a predetermined business strategy, talent management should play an active role in defining future business horizons. This view “offers a systems-level, strategic perspective that makes the T[alent ]M[anagement] concept one that adds value and opens new research possibilities” (Lewis & Heckman 2006, 143). The added value Lewis and Heckman see for talent Jones-26 management lies in its ability to become a decision science that systematically considers the impact HR practices can have on future business outcomes. Researchers John Boudreau and Peter Ramstad offer a theoretical model for converting talent management into a decision science. In an interesting twist from aforementioned considerations of global economic shifts, they note that as economic models have changed throughout human history from agriculture to trade, to capital, and to today’s information age, the constrained resources and critical assets enabling those economies have respectively shifted from tillable land to transportation means, to tangible capital goods, and, finally, to talent (Boudreau & Ramstad 1997). Further, they find that each economy builds its decision-making models around the key constraints that drive it. Marketing and finance were developed in the 20th century as predictive evolutions of professional sales and accounting practices respectively and were designed to optimize capital investments, the key constrained resource of the capital economy. With unprecedented financing widely available in the post-industrial 21st century, the authors believe human capital is now the primary constrained resource in the information age and is therefore worthy of its own decision model. The shortcoming the authors identify with existing HR programs is that they, like sales and accounting practices, are usually internally focused on measures that are past- and cost-oriented (Boudreau & Ramstad 1997). Just Jones-27 as the decision sciences of finance and marketing evolved from accounting and sales practices, so too, they argue, must a new talent decision science evolve from existing HR practices to optimize investments in constrained talent resources. A decision science “provides a logical, reliable, and consistent framework that enhances decisions about a key resource wherever those decisions are made” (Boudreau & Ramstad 2005, 20). They are careful to note that decision sciences do not necessarily prescribe specific actions but rather create a process that can be learned and used by any business leader to “increase the success of the organization by improving decisions that impact or depend on talent resources” (Boudreau & Ramstad 2005, 20). Boudreau and Ramstad propose that this new science be called “’talentship’…to reflect the notion of stewardship for the resource of employee talents” (2005, 20). Their talentship decision-making process includes three stages: impact, effectiveness, and efficiency. Impact asks the question, “’How much will strategic success increase by improving the quality or availability of a particular talent pool?’” (Boudreau & Ramstad 2005, 22). Here the authors recommend that organizations exercise “talent segmentation,” (Boudreau & Ramstad 2005, 22) which is a process of differentiating talent pools based on relative importance to overall strategic success. Those groups with the greatest impact on strategic success are Jones-28 labeled “’pivotal talent pool[s]’” and should be targeted with greater investments (Boudreau & Ramstad 2005, 22). The second question of talentship is “’How much do HR programs and processes affect the capacity and actions of employees in talent pools?’” (Boudreau & Ramstad 2005, 23). The authors find that most HR practitioners are more adept at identifying program effectiveness than they are at considering the impact of different talent pools. In other words, HR professionals tend to be more internally focused on programs and often ignore the larger perspective of where programs might be most strategically effective. Finally, efficiency asks “’How much HR program and process activity do we get for our investments?’” (Boudreau & Ramstad 2005, 23). This step involves traditional HR measures such as recruiting costs per hire and ratios of HR professionals to total employees. Taken together, these steps offer a “guide to reframing talent issues within existing strategy discussions, budgeting processes, or talent management and performance processes” (Boudreau & Ramstad 2005, 25). This notion of talentship as a process that can be easily integrated into other common business processes is key. Talentship thus becomes HR’s “teachable point of view” (Tichy 2001, 69), or a common language and process that can be used and valued by all. Lewis and Heckman agree that with a shared understanding of the strategic value of talent and of how to Jones-29 leverage it effectively HR will have finally earned its “’seat at the table’” (2006, 147). Applying Senge’s (1990) systems emphasis on the importance of basic ways of thinking to talentship, the greatest benefit of the idea of strategic talent management as a decision science lies in the shift in perspective it requires of HR professionals from an insular, cost controlling practice to a systematic, future-oriented science of value creation. Importantly, Lewis and Heckman (2006) are the only authors found in the literature who refer explicitly to talent management within a systems framework. They champion “system-level analysis” (Lewis & Heckman 2006, 148) as the optimal approach to sustainable talent strategies and the sole path by which talent management can be deemed worthy of its new label. While the rest of the literature can be described as implying a systems approach through partial consideration of various organizational structures, no one, including Lewis and Heckman, regards strategic talent management in a truly comprehensive systems framework encompassing relevant external and internal forces. Lewis and Heckman (2006) and Boudreau and Ramstad (2005) come closest to this perspective. Yet whereas the McKinsey consultants take a non-strategic approach to internal structures in their narrow focus on topgrading, the same could be said of the decision science authors who ignore important external structures. They ignore, for example, the affect the new employment deal might have in neutralizing pivotal talent Jones-30 pools. An organization like AC might decide that its engineers represent a more pivotal talent pool than its scientists in terms of capacity to deliver future business strategy. Yet if the company was to dedicate a disproportionately larger amount of resources toward its engineers versus its scientists, it may well create feelings of inequity among the latter group. In the new employment landscape, such disenfranchised professionals are more likely to leave in search of other organizations who will invest in their talent. In this example, AC would have successfully exercised a talent decision process but would have then weakened its capacity to deliver on strategy by ignoring a key external structure. I find the concept of strategic talent management as a decision science to be a compelling synthesis of internal HR practices. The concept only lacks consideration of additional internal and external system structures to fulfill its promise of more effective talent management. Only through a comprehensive systems view encompassing external and internal influences on talent can HR practitioners hope to devise optimal, sustainable solutions. DESIGN AND IMPLEMENTATION The initial contracting phase of an organization development project involves the communication of perceived client issues, agreement upon intended project outcomes, and clarification of mutual, client-consultant expectations pertaining to how work will be accomplished (Block 2000).This Project began through a contracting process during which the primary client Jones-31 at AC detailed the organization’s shortage of skilled workers and subsequent initiatives to create an employer brand and reexamine recruiting efforts. The client explained that an online employer brand survey had already been conducted to determine how new employees felt about AC as an employer but that the results of this survey had not yet been analyzed. I also learned of the higher turnover rate among employees with three or fewer years’ tenure and of the client’s concern that there might be more contributing factors to AC’s worker shortage problem than were currently known. The client agreed with my recommendation that a systems approach be used for the Project in order to discover all relevant organizational factors influencing AC’s worker shortage issue, including the determination of its employer brand. The Project outcomes were to encompass a comprehensive view of AC as well as recommendations for specific employer brand themes that could be further distilled into targeted recruiting communications. As for the methodology through which I would apply the systems framework to meet the client’s needs, I recommended the action research method. French and Bell define action research as: “the process of systematically collecting research data about an ongoing system relative to some objective, goal, or need of that system; feeding these data back into the system; taking actions by altering selected variables within the system…; and evaluating the results of actions by collecting more data” (1999, 130) Jones-32 In the case of AC, the client agreed that I would be granted access to people and information at the company in order to gather and analyze data. The information gleaned from this research was to be shared periodically with the client to check for validity, to determine jointly specific courses of action, and to establish any necessary adjustments to the research approach. This methodology thus requires a significant degree of involvement on the part of the client in interpreting research data and making decisions based on that information. I described this involvement to the client not only as a key condition of the Project but also as a source of learning that could ultimately render AC less dependent on future consultants for similar projects. Block describes this consulting partnership as “collaborative” (2000, 25). Whereas “expert” (Block 2000, 22) consultants provide a packaged product requiring less participation from their clients, “collaborative” (Block 2000, 25) consultants work to engage the client throughout the process in determining how the project should unfold. Through a deeper level of engagement, clients enhance their learning from the project experience as well as their ability to implement strategic initiatives based on project findings. Edgar Schein refers to this method as “process consulting,” the main goal of which is “helping the organization to help itself” (2004, 208). For this reason, decisions regarding the action research steps of data collection, data feedback, actions taken, and interpretations of results were collaborative and transparent. I continually kept the client informed of data Jones-33 collected and of my interpretations of the data, giving the client every opportunity to influence the course of the Project. Upon completing the contracting phase, I performed a comprehensive review of the literature pertaining to talent management and employer brand. My intent was to inform the data gathering process with a wellbalanced understanding of current theory and practices in these fields. I focused my literature review on books and articles published within the last ten years and included a combination of theorists and practitioners. In preparation for the data gathering process, I analyzed relevant quantitative and qualitative results of the online branding survey that had previously been administered by AC. From the quantitative results (questions 2 and 4), I determined the attributes that participants indicated were most appealing to them about AC as an employer by calculating and ranking percentages of respondents by attribute (Table 1). From the openended responses to the qualitative questions (3, 5, & 6)(Table 2), I noted recurring themes. Themes were ranked based on frequency of occurrence and compared to quantitative results. Based on frequency of occurrence in both categories, the following four brand themes were distilled: challenging projects, opportunity for development, stability of the company, and positive reputation of AC. The list of themes was shared with the client for validation and for use in the data gathering process. Jones-34 Table 1. Answer Choices Better compensation and benefits offered Challenging work Culture of the company 2. While there may be many Development and training opportunities reasons you were attracted New location to an employment New management approach and/or work environment opportunity with AC, select Opportunity to apply new technologies your top 3 reasons. Other Promotional opportunity Quality reputation Chance to work independently Compensation and benefits Development and training Diversity 4. As you considered an Employee ownership employment opportunity with Entrepreneurial approach of the company AC, which of the following Flexible work schedules influenced your decision to Future growth potential accept the offer? Reputation of the company Stability of the company Supervisor/work team Work environment/culture Question Total Percentage Ranking 174 9.1% 5 354 18.5% 1 268 14.0% 3 160 8.4% 6 107 5.6% 8 176 9.2% 4 98 5.1% 9 125 6.5% 7 161 8.4% 6 292 15.2% 2 168 5.4% 10 278 8.9% 7 202 6.5% 8 107 3.4% 11 199 6.4% 9 84 2.7% 12 301 9.7% 5 398 12.8% 1 368 11.8% 3 374 12.0% 2 281 9.0% 6 347 11.2% 4 Table 2. Qualititative Questions 3. What is AC's reputation? How do you think we are perceived? 5. If a potential employee called you today, how would you describe the company? 6. Our goal is to attract great people to the company, but we are competing for talent. As we work to find new employees, what do you think we will make AC stand out ahead of the competition? To frame data gathering within a systems context, I categorized elements of the client system into six structures: strategy, infrastructure, competency, people, culture, and environment. This structural outline was based on a model developed by Dave Frostman (pers. comm. January 9, 2006) to aide the researcher and client in considering all relevant system structures. The one change made to Frostman’s model was the “environment” category, which was added to capture the external Jones-35 structures, like declining engineering graduates, that influence a client system (French & Bell 1999). “Strategy” refers to the presence and shared understanding of a clear and compelling strategy (Frostman, pers. comm. January 9, 2006). “Infrastructure” refers to all the processes, tools, and systems used by the organization to carry out its mission, such as HR systems, workflow, and communication systems. “Competency” includes the distinctive capabilities of an organization that make it successful. “People” involves the skills, abilities, and motivation of the employees of the company. Finally, “Culture” refers to the shared, often tacit, assumptions among organization members about how to work in the company. Examples of cultural indicators include the manner in which work is performed and the way decisions are made (Schein 2004). In an effort to gain as complete an understanding of the complexities of AC as possible, I relied on a variety of data gathering techniques and sources (Block 2000). The overarching intent of this process was not to generate statistical, quantitative evidence, but to determine prevalent qualitative data that could be validated through its consistency. As Block notes, collaborative consultants need only continue researching until the themes they are finding become noticeably repetitive (2000). Similarly, Schein advocates “interpretive accuracy” (2004, 209) as a valid means of verifying organizational phenomena through consistent findings. Jones-36 Over the period of two months, I conducted sixteen unstructured interviews with managers from different departments, from different managerial levels, and from across the U.S. Participants located at corporate headquarters were typically interviewed in person, and those located elsewhere were interviewed over the phone. Phone interviews provided an expanded sampling of participants in a timely and cost-effective manner. Interviewees were selected through a non-probability convenience sampling based on availability and willingness to participate (Trochim 2006). By “unstructured,” I mean to say that interviewees were asked open-ended questions about the positive and negative perceptions they held toward aspects of the six structures of AC and of the four initial employer brand themes. The interviews were kept conversational so as to elicit the issues that mattered most to participants. This model for unstructured interviewing was based on Block’s consultative approach, in which he posits that researchers treat the “[i]nterview as a Joint Learning Event” (2000, 42). In this manner, the researcher takes a more active, conversational role during an interview to facilitate mutual learning. All interviewees signed a consent form (Appendix A) acknowledging their willingness to participate in exchange for the confidentiality of their unique comments. Responses were captured in notes and analyzed as soon as possible after a session to determine common themes. These themes Jones-37 were cross-referenced against comments from other interviews and other data sources to establish validity based on recurrence. Additionally, thirty-three structured interviews were held pertaining specifically to AC’s employer brand. The structured interview was chosen as the best method to provide comparable qualitative data on the four initial brand themes (PARE 1997). In continued collaboration, the client reviewed and agreed to the list of questions (Appendix B). These interviews were conducted via telephone to minimize costs, save time, and to allow access to a wider sampling of employees located across the U.S. Interviewees were chosen from a list of online survey participants who had indicated a willingness to talk further about employer brand. Brand interview participants were selected using a combination of probability and non-probability sampling methods, both systematic and convenience sampling respectively (Trochim 2006). From the list of the previous survey’s participant names, every tenth name was selected in a systematic sample. From this list, participants were added or removed based on availability as a final convenience sample. Phone interview participants signed the aforementioned consent form (Appendix A). Aside from interviews, I observed and participated in five employer brand project team meetings at AC. The employer brand project team consisted of HR and marketing managers. I also observed the physical environment of the company headquarters buildings. As Block (2000) notes, Jones-38 observations of meetings and physical environments provide valid data toward understanding human interactions in organizations. Another source of data Block advocates is the personal experience of the researcher: “Your own reactions to a client, your own feelings during discussions, your own ability to solicit feedback from the client—all are important dimensions to consultation” (2000, 13). Accordingly, after each interaction with members of AC I reflected on the various reactions I experienced. Additional sources of data included published and proprietary company literature and financial reports, the company’s internal intranet and public Internet sites, and previous organizational surveys pertaining to the company’s work environment (Block 2000). Finally, I researched competitor websites to determine competing employer brand themes from which AC would need to differentiate itself, a key requirement for a successful employer brand (Barrow & Mosley 2005; Gibbon 2004; Hornung 2006; Rogers 2003; Sartain & Schumann 2006; Schumann 2006; Van Leeuwen et al. 2005; Woodall 2005). Data gathering took place over a period of approximately two months. While gathering information about AC, I pieced together systemic themes that emerged from multiple data sources. In accordance with the action research method (French & Bell 1999), I openly tested these themes with client members in an ongoing manner throughout the data gathering phase of the Project. This circular process of data gathering, analysis, and feedback Jones-39 to the client served to prove or disprove emerging themes and enabled deeper probing into the complexities of the organization’s systems. For example, as the theme of a lack of clear strategy emerged from interviewee comments, from contradicting company documents, and from my own confusion in attempting to interpret AC’s strategy, I shared this theme with various interviewees and engaged them in deeper conversations about why the strategy was unclear. Through this circular process I learned still more about how the company creates and communicates strategic objectives. Once all data gathering was complete, I reviewed the quantitative data and qualitative themes to ensure that the emerging picture of the organization and its various systems was clear and consistent (Block 2000). I then presented a summary of findings to the primary client for comments and reactions. I framed this summary into a two-tiered SWOT analysis (Tables 3 & 4, Discussion). SWOT analyses are strategic process tools with roots in the field of marketing that are designed to help organizations identify and act upon their internal strengths (S) and weaknesses (W) and external opportunities (O) and threats (T)(Harvard Business School 2005). I chose SWOT analysis as a presentation format for two reasons: one of the Project findings included that AC is generally weak in its strategic capacity; and scholars typically advocate that an employer brand, a key deliverable of this Project, be thought of in terms of a marketing initiative (Barrow & Mosely 2005; Hornung 2006; Sartain and Schumann 2006; and Woodall Jones-40 2005). The two-tiered nature of the SWOT analysis included one tier for AC’s organization systems, including various talent management structures, and another layer of analysis for its employer brand. This approach framed the employer brand within the larger context of organizational structures. Upon reviewing the summary findings in the SWOT analyses, the client determined to draft two new documents to present to the employer brand project team. The first document dealt solely with employer brand themes, and the second reiterated the two-tiered SWOT analysis. Finally, both documents were presented in collaboration to the employer brand project team. Overall, the Project went very well with the vast majority of people I contacted openly sharing information and experiences and being quite candid in the process. The greatest barriers for this Project were the lack of access to senior executives and the lack of senior management sponsorship for the Project. Despite repeated direct and indirect requests for interviews with senior executives, I was never given the opportunity to interact with or observe them. Additionally, the client did not intend for me to be involved with the last phases of the action research method pertaining to implementation. While disengagement at this stage of the consultative process is commonplace (Block 2000), the full extent to which the Project findings might be implemented is unknown. Jones-41 RESULTS The Results section is organized as follows: first, the findings pertaining to each of the six structural elements of AC are reviewed; second, the specific findings pertaining to AC’s employer brand are provided; finally, client reactions and outcomes of the Project are considered. Structural Elements. “Strategy.” AC’s strategy was outdated, and the majority of employees interviewed were unclear about it. The primary document capturing the organization’s strategy was labeled the “Strategic Road Map” and could be found on the company intranet site. The intranet version was dated 2002. However, I was given an identical printed copy dated 1997. Thus, the Road Map was likely ten years old, well beyond the annual strategic horizon typical of best practice organizations (Kaplan & Norton 2005). In addition to this version of the strategy, I found another version on a regional website that purported to demonstrate more clearly how the Road Map related to employees. Some of the employees I spoke with had seen this second version while most had not. Aside from these two documents there was a third entitled “Tactical Initiatives.” This document was dated 2003 and listed five initiatives, only some of which related intuitively to the Road Map. Thus, there were multiple strategic documents at AC that did not clearly relate to each other. Jones-42 The people I spoke with about the company’s strategy were unable to communicate a consistent version. One senior manager began a description of the strategy with, “I guess it’s to…,” expressing an uncertainty. Some were able to list a few of the strategies, but no one articulated them all. Additionally, when asked to discuss how their work related to the strategy of the business, none was able to do so in a cogent manner. Instead, several managers spoke of dissonant directions being given by leadership, with more than one person making reference to “unfunded mandates,” or directions given without the necessary resources to fulfill them. Kaplan and Norton find such high levels of confusion around strategy to be commonplace among most organizations (2005). At the same time, they note that “[i]f the employees…are unaware of the strategy, they surely cannot help the organization implement it effectively” (Kaplan & Norton 2005, 72). Thus AC’s capacity to realize strategic objectives was significantly diminished through lack of clarity and alignment. “Infrastructure.” This section considers various talent management practices at AC as well as communications and work processes. The HR group had recently undergone a significant reorganization. The Senior Vice President (SVP) of HR had teamed with regional HR Vice Presidents (VPs) to form an HR Council leading the HR function. The SVP and VPs were located at corporate headquarters, and there was a concerted Jones-43 effort underway to centralize and streamline disparate HR practices across the enterprise. The recruiting process had previously been supported on a part-time basis by over 100 HR generalists in local offices across the country. Recruiting practices varied widely, and data pertaining to recruiting efforts remained difficult to compile. Within the last twelve months, AC had hired its first director of recruiting who was reorganizing and streamlining the recruiting function into talent recruiting centers. Each center was aligned with internal client groups and staffed based on projected hiring needs. As a corollary of recruiting reform, AC’s employee referral program was also being streamlined. Numerous and disparate referral initiatives were being consolidated to one program. New hire on-boarding was also being revamped. Several managers spoke of difficult on-boarding experiences, and interviewees for the employer branding survey consistently expressed that new hires must be especially self-motivated in building social and professional networks if they are to be successful. An on-boarding task force was working to make new hire employees’ first few months more consistent across the business. The performance management process had already seen significant improvements culminating in an online, interactive tool that automatically prompted employees and supervisors alike to participate in the process. In Jones-44 spite of the design of the improved tool, however, employees and HR managers both reported the tool was still being used inconsistently. AC’s compensation group was preparing to launch a new rewards and recognition program to replace a legacy bonus schedule. According to several managers and survey comments, the previous annual bonus program had been shrouded in mystery with employees not fully understanding why they received a bonus or how the bonus amount had been calculated. The new rewards and recognition program, by contrast, would offer on-the-spot recognition for specific employee behaviors and results in both monetary and non-monetary ways. Such a model is advocated by Ashby and Pell (2001) as representing best practice. The employee development program was undergoing a similar overhaul to that seen in recruiting and on-boarding. The development offering encompassed supervisory development, leadership development, succession management, mentoring, and more. The learning and organization development group was focused on integrating these offerings into one framework modeled after Charan et al.’s (2001) leadership pipeline. Finally, as for retention, I was not able to conduct exit interviews with people who had left AC within the past year. As Ashby and Pell (2001) comment, such interviews can be extremely helpful in learning how an organization can improve its talent retention. Unfortunately, AC did not keep consistent records of separated employees. However, discussion had Jones-45 recently begun about developing a streamlined process to capture such information in the future. Altogether, the HR function at AC was making significant efforts to improve by streamlining inconsistent processes. Among certain disciplines, such as compensation and development, best practices were being implemented. However, a clear HR strategy driving strategic value creation remained an unrealized opportunity. Most of the initiatives above were managed in a non-integrated manner, and most HR managers did not speak of their efforts in terms of measurable outcomes impacting overall business results. For example, new hire on-boarding efforts focused only on consistency and did not consider potential impact on retention objectives. Some managers felt that HR had a “seat at the table” at AC while others openly disagreed. I find for the latter in that there was no clear ownership of talent management outside the HR function at AC. In best practice organizations, line managers are held accountable for talent management outcomes, such as retention, while the HR function serves as consultant and facilitator (Sims 2002). There were, according to most managers interviewed, very few positions in AC whose primary responsibility was managing others. Most supervisors dedicated the majority of their time to billable client projects. As the company continued to win more projects and as open positions remained unfilled, managers tended to sacrifice their supervisory duties in favor of keeping up with increasing project workloads. Jones-46 Thus, accountability for talent management across the business was lacking and declining. The communications team was likewise going through a period of reorganization. Several department managers spoke of a shared desire to improve internal communications. Such practices were limited to regular companywide, regional, and business group newsletters, as well as a company intranet site. After reviewing these directional vehicles, one manager commented he hoped to see new communication channels that could facilitate more upward communication, from line managers up to senior management. Kaplan and Norton (2005) similarly recommend that companies implement processes that facilitate both downward and upward communication. Finally, work processes and organizational structure at AC were described as extremely complex. The company had over ten unique business groups specializing in specific industries. Clusters of business groups were combined into client groups based on shared client types. The U.S. market was further divided into four regions, and each region had a significant number of local offices. Some smaller offices housed only one business group, while most contained several, if not all, groups. There were local office managers, regional managers, business group managers, and client group managers working in a highly matrixed organizational structure. Too, Jones-47 at any given time, AC was engaged in literally thousands of different projects. Every organizational design has its pros and cons (Galbraith et al. 2002). Yet, the complexity of AC’s design seemed to hamper key business processes. A number of managers spoke of ineffective business development methods, saying that AC was often too slow in responding to new project opportunities. Another example involved the initiative of cross-selling different business group services to clients, or “selling the company store.” Senior leadership believed that significant cumulative opportunities lay in offering existing clients more services. However, each business group was responsible only for its own profit and loss (P&L), and there were no rewards or incentives for generating new revenues for other business groups. These vertical P&Ls, then, served to discourage managers from delivering on the cross-selling initiative. “Competency.” AC’s core competency was its proven ability to solve any and every client problem for each of its projects. Numerous people spoke of program managers and project managers who were widely regarded as leading experts in their respective fields. Interviewees also related a pervasive drive to channel this technical competency to exceed customer expectations. Clear themes of concern for worker, client, and public safety, as well as doing the right thing for the environment also emerged. Jones-48 “People.” The vast majority of the people I spoke with seemed very satisfied to work for AC, with most expressing overwhelmingly positive views of the company and a strong sense of pride. They were mostly educated and skilled professionals. As mentioned above, the technical skills of the people at AC were believed to be of the very highest. Most people felt they got to do what they do best every day, although staff workers were more inclined to comment that they did not have the same level of challenging work as their engineering and scientific colleagues. The primary barriers that seemed to keep people from accomplishing their work were bureaucracy and conflicting strategic initiatives. “Culture.” The culture of AC was perhaps its greatest strength. Employees shared an optimistic view of the future of the firm and were energetic about realizing that view. They tended to be highly engaged in their work and spoke of high performance expectations driven more by personal pride than management. People typically expressed a deep commitment to excellence in their work. Interviewees also consistently talked about high levels of care and concern for employee wellbeing at AC. Many spoke of flexibility and support for work-life balance. Indeed, several people I spoke with worked from home, worked part-time, or had a different working arrangement that accommodated personal needs. Jones-49 As for decision-making, numerous interviewees felt that the company made business decisions slowly and that it seemed to have difficulty adhering to any given decision once made. There was a pervasive espoused value of consensus decision-making. Schein defines “espoused values” as those beliefs that organization members say they follow regardless of whether or not they actually do so (2004, 29). Further, differences between what people say they do and what they actually do can provide deeper insights into an organization’s basic assumptions, or culture. The idea of consensus decision-making seemed to fit the high-engagement culture of AC. However, while in the employer brand project meetings I attended, I did not see consensus-based decision making take place. Further, managers across the business commented that the HR Council and senior leaders did not make decisions based on such a model, that many decisions were instead made in a top-down fashion, and that communicated decisions frequently changed. “Environment.” As described in the Introduction, the external environment offered AC both exciting opportunities and serious challenges. AC continued to win larger and more prestigious project contracts, and there were more multi-billion dollar projects than competing firms capable of undertaking them. According to many managers, though, the single greatest threat to AC’s potential to win these projects was its ability to hire and retain Jones-50 the talent necessary to do the work. Many spoke of increasing levels of individual workloads and stress. AC competed against firms both within and outside its industries for engineering and scientific talent. With the availability of such talent on the decline in the U.S., AC would likely have to compete more aggressively for new talent entering the market as well as for experienced talent working in the same or in other industries. Unfortunately, interviewees shared that outside its immediate industries, AC was largely unknown. Its existing employer brand was invisible, making the attraction of new and experienced talent more difficult. Employer Brand. Katherine Woodall (2002) finds that as the number of employment choices rises for workers in the new employment landscape, the importance of a strong employer brand increases by providing potential candidates with condensed employer information. Scholars generally agree than an employer brand should provide a truthful glimpse of the company that, ideally, separates it from other firms competing for the same talent (Barrow & Mosley 2005; Gibbon 2004; Hornung 2006; Rogers 2003; Sartain & Schumann 2006; Schumann 2006; Van Leeuwen et al. 2005; Woodall 2005). In working to determine its employer brand, AC conducted an internal online survey which identified the following four aspects of AC as most influencing new hires to join the company: challenging projects, reputation Jones-51 of the company, opportunity for development, and stability of the company. The questions (see Appendix B) posed during the follow-up phone interviews sought to validate these themes and also to identify other themes that accurately captured employees’ experiences at AC. Most engineers and scientists expressed that AC offered some of the most challenging projects available. People also widely agreed with the theme of opportunity for development but noted that most development came from on-the-job experiences rather than formal training programs. Interviewees mostly agreed that AC had a solid reputation in its industries and was highly stable as a company, although the relative importance of these latter themes was less than the first two. In addition to these initial messages, a strong new theme emerged from the phone interviews: “great people.” Virtually everyone spoke of AC employees both in terms of friendliness and of high levels of professional competence. Interviewees consistently expressed that this was very important to their overall enjoyment of work and to the success of the company. They also emphasized that the people who are successful at AC proactively establish social and professional networks. Many considered this self-directed behavior essential for survival in the face of a large, complex, and bureaucratic organization. Finally, and as mentioned previously, to ensure differentiation of AC’s employer brand message, I researched competitor websites. Very few AC Jones-52 competitors had a clear brand message. Competitor themes used most often included challenging projects, opportunity for development, making the world a better place, and industry leadership. Given the common use of the themes challenging projects and opportunity for development, AC would need to combine these strengths with the unique differentiator of working with great people. As one interviewee aptly suggested, “Come for the challenging projects, and stay because it feels like home.” Project Outcomes. The primary client and the employer brand project team were pleased with the results of this Project. They commented that the SWOT analyses (Tables 3 & 4, Discussion) provided insightful learning about AC’s systems, including the firm’s talent management practices and employer brand. They agreed that the systems view of the Project gave them a “big picture” perspective within which individual talent initiatives such as recruiting and employer brand could be more clearly understood. Additionally they commented that the employer brand themes were precise and could be readily distilled into targeted recruiting messages. The presentation of Project findings was the final client deliverable. At the time of writing, members of the employer brand project team were creating recruiting messages and were formulating a plan to present Project results to the HR Council. Jones-53 DISCUSSION The SWOT analysis used in the client presentation of this Project provides a comprehensive view of relevant organizational structures at AC (Table 3). From a systems vantage point, the lack of strategic direction Alpha Company SWOT Analysis Internal Strengths: Internal Weaknesses: • Culture of engagement, • Unfocused strategy optimism, and work-life • Line management not balance accountable for human • Strong competency for capital, HR not at the table delivering projects in • Inconsistent decisionvarious industries making • Strong financial position, capacity for growth External Opportunities: External Threats: • Sterling reputation of firm • Other firms competing for among industries served diminishing talent pool • Major projects increasingly • Lack of employer brand available • Other firms competing for • Growth through acquisition projects of smaller firms and/or organic emerges as AC’s greatest weakness. Not only does an absence of strategy generate confusion and increase the likelihood of wasted resources (Kaplan & Norton 2005), it also has a negative affect on other structural elements that are ultimately inseparable in an organizational system (French & Bell 1999). Thus in clarifying and communicating strategy, AC’s senior managers can reap significant benefits organization-wide. Senior executives can gather with client group leaders, regional leaders, and business group leaders to determine an overarching strategy for AC. Kaplan and Norton offer a proven model for strategic alignment Jones-54 through the creation of an “Office of Strategy Management” (OSM) (2005, 72). This OSM is typically led by a senior executive reporting directly to the CEO. This individual not only specializes in facilitating strategic discussions among leaders, but also ensures that similar discussions are held throughout the enterprise and that each employee’s performance objectives are clearly tied to the resulting strategy. The key benefit of Kaplan’s and Norton’s OSM is that it engenders systemic dialogue—both downward and upward communication—about what an organization wants to accomplish and how it can reasonably do so. This strategic process offers HR leaders an excellent opportunity to demonstrate to senior managers the value of talent through a decision science model. As executives better understand the potential for value creation made possible through targeted investments in talent management, the likelihood of HR’s inclusion in overall business strategy formulation increases (Boudreau & Ramstad 2005 ; Lewis & Heckman 2006). Such an inclusion could provide HR with a “seat at the table” and could facilitate a necessary and fundamental shift in thinking toward a “talent mindset” (Michaels et al. 2001, 11) in which talent becomes a pervasive organizational concern and responsibility. Strategic alignment at AC can also do much to improve the infrastructural components of HR programs and of the matrix organizational design. As HR programs are considered based on their ability to deliver Jones-55 strategic objectives, they necessarily become more integrated with each other (Cohn et al. 2005; Frank et al. 2004; Sims 2002). AC already enjoys many best practice tactics within its individual HR programs. Strategic alignment can help ensure the HR infrastructure delivers effectively. For example, recruiting and retention objectives can drive the design of recruiting, onboarding, performance management, compensation and benefits, and development programs. Strategic clarity can similarly help optimize the use of resources within a complex, matrixed organizational design. Galbraith et al. (2002) note that the typical challenge of a matrixed business is increased contention over shared resources. A clear strategy can better inform resource allocation by providing guidelines against which such decisions are made. For example, if “selling the company store” were a clear strategic objective, the decision to assign P&Ls to separate business groups might be reconsidered due to the barriers such an arrangement poses to strategic outcomes. Aside from improving on areas of weakness, AC can generate strategic discussions around leveraging its strengths. The firm is fortunate to have strong organizational competency in the engineering and scientific fields it serves. Many interviewees spoke proudly of numerous AC managers being widely regarded as the best in their fields. Additionally, the collective pride in and commitment to high levels of performance among AC’s people is a Jones-56 tremendous asset in the Information Age (Drucker 1999; Michaels et al. 2001; O’Toole & Lawler 2006). The culture at AC reflects the competency and drive of its people. It is also influenced by the company’s long-standing commitment to employee work-life balance. These assumptions are reflected in the brand theme that emerged through this Project: “great people.” Employees at AC like their coworkers and appreciate the exceptional professional skills they possess. AC can seek out ways to reinforce these elements and continue to benefit from them. In the new employment landscape, in which technically skilled professionals can easily work elsewhere, such elements represent powerful retention opportunities. One particular opportunity lies in the degree to which consensus decision-making is used. Consensus is a more difficult decision-making model in that its success relies heavily upon the openness and candor of those involved. As Charan writes: “Dialogue is the basic unit of work in an organization. The quality of the dialogue determines how people…make decisions, and how they feel about one another and about the outcome of those decisions” (2006, 110). For Charan, if decision makers are not open, candid, and informal with each other, and if they do not make clear commitments and assign accountability once decisions are made, a “culture of indecisiveness “ results (2006, 110). To the degree that consensus Jones-57 decisions are practiced at AC, clarity around decisions and employee engagement can be deepened. Finally, the market environment for AC promises a bright future in terms of a virtually limitless market of multi-billion dollar projects. However, the war for talent remains AC’s greatest environmental threat, especially when considering the shrinking supply of engineering and scientific talent. AC’s position in the talent war is further exacerbated by its largely invisible employer brand (Table 4). While it is true that few of AC’s immediate Table 4. Alpha Company Employer Brand SWOT Analysis Internal Strengths: Internal Weaknesses: • Positive, true themes of • Lack of executive great people, challenging sponsorship for employer projects, and opportunity for brand initiative • Unclear initiative funding growth and measures for success— • Employer brand can be may become another readily aligned with market brand “unfunded mandate” External Opportunities: External Threats: • Immediate competitors do • Companies in other not yet have clear employer industries seeking similar brands to compete against talent do have clear employer brands industry competitors have developed brands to compete for talent, sixteen out of the top fifty companies listed in Business Week’s “The Best Places to Launch a Career” (2006) are seeking the same engineering and scientific talent sought by AC and have already developed targeted employer brand messages. Thus a strategy for launching a compelling employer brand could do much to secure AC’s future. Jones-58 In light of the organizational picture generated by the systems framework of this Project, the employer brand initiative, like all AC’s HR initiatives, exists in a strategic vacuum. These initiatives are therefore at risk of becoming unfunded mandates. In regard to the brand initiative, researchers warn that such projects are likely to become simplistic advertising slogans in the absence of unanimous energetic support from executive leadership (Barrow & Mosley 2005; Gibbon 2004; Hornung 2006; Rogers 2003; Sartain & Schumann 2006; Schumann 2006; Van Leeuwen et al. 2005; Woodall 2005). Only when leaders understand and champion the value an employer brand can bring to the firm’s strategy will its chances for survival and success be realized. This Capstone Project contributes to the literature on systems thinking and strategic talent management. By combining these disciplines organizations can enjoy an increased capacity to leverage talent, the primary constrained resource of the Information Age, toward optimal business outcomes. Further, the field of HR can better secure its place at the strategic table by developing and sharing a decision science that can be used by others to craft talent strategies encompassing systemic analyses of all relevant external and internal structures. In an increasingly global and complex world, business leaders must embrace an unprecedented complexity of thinking. Systemic talent management is a process tool that can help people and organizations manage such complexity effectively. Jones-59 In the case of AC, the systems framework culminates in a comprehensive talent management view informed by a larger, structural context. This context gives the organization a clearer understanding of the myriad forces affecting their talent management issues and better enables AC to implement sustainable change. Without this perspective, attempts at change would be myopic in their focus and ultimately less effective. AREAS FOR FURTHER RESEARCH While a promising concept, talent management as a decision science process is in its infancy. Boudreau and Ramstad (2005), the leading scholars in this discipline, offer no case studies to prove the efficacy of their process model. They do, however, acknowledge that strategic talent management will evolve over time as researchers and practitioners discover and test new analytical tools. Additionally, too few researchers and practitioners make use of systems thinking when addressing talent issues. Many unknowingly imply a partial systems framework through consideration of multiple external and internal structural elements, but they fall short of a comprehensive model such as the structural model used in this Project. Further development in these areas can help organizations identify strategic talent management opportunities that create valuable, sustainable business outcomes. Jones-60 REFERENCES Arthur, Diane. 2006. Recruiting, interviewing, selecting & orienting new employees. 4th ed. New York: AMACOM. Ashby, Franklin and Arthur Pell. 2001. Embracing excellence: Become an employer of choice to attract and keep the best talent. Paramus, NJ: Prentice Hall. Barrow, Simon and Richard Mosley. 2005. The employer brand. Hoboken, NJ: John Wiley & Sons, Inc. Block, Peter. 2000. Flawless consulting: A guide to getting your expertise used. 2nd ed. New York: Jossey-Bass/Pfeiffer. Boudreau, John and Peter Ramstad. 1997. Measuring intellectual capital: Learning from financial history. 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Mark. 2006. “Employer branding as the foundation for organizational success.” www.hodes.com/publications/pdfs/branding_mhornung.pdf. (accessed October 30, 2006) Hubbard, Edward. 2004. The diversity scorecard: Evaluating the impact of diversity on organizational performance. Oxford: Elsevier ButterworthHeinemann. Kaplan, Robert and David Norton. 2005. The office of strategy management. Harvard Business Review. 83: 72-80. Lewis, Robert and Robert Heckman. 2006. Talent management: A critical review. Human Resource Management Review. 16: 139-154. Losey, Michael. 2005. Anticipating change: Will there be a labor shortage? In The future of human resource management. Eds. Michael Losey, Sue Meisinger, and Dave Ulrich. Hoboken, NJ: John Wiley & Sons, Inc. Martel, Leon. 2002. High Performers: How the best companies find and keep them. San Francisco: Jossey-Bass. Maslow, Abraham. 1943. A theory of human motivation. Pyschological Review. 50: 370-396. 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Sartain, Libby and Mark Schumann. 2006. Brand from the inside. San Francisco: Jossey-Bass. Jones-65 Schein, Edgar. 2004. Organizational culture and leadership. San Francisco: Jossey-Bass. Schumann, Mark. 2006. You are how you brand. Communication World. 23: 29-31. Sears, David. 2003. Successful talent strategies. New York: AMACOM. Senge, Peter. 1990. The fifth discipline: The art & practice of the learning organization. New York: Doubleday. Sims, Ronald. 2002. Organizational success through effective human resources management. Westport, CT: Quorum Books. Tichy, Noel. 2001. No ordinary boot camp. Harvard Business Review. 79: 63-70. Trochim, William. 2007. Research Methods Knowledge Base. http://www.socialresearchmethods.net/kb/sampprob.php. (accessed January 13, 2007) Tsui, Anne and Joshua Wu. 2005. The new employment relationship versus the mutual investment approach: Implications for human resource management. In The future of human resource management. Eds. Michael Losey, Sue Meisinger, and Dave Ulrich. Hoboken, NJ: John Wiley & Sons, Inc. Tulgan, Bruce. 2004. Generational shift. In On staffing: Advice and perspectives from HR leaders. Eds. Nicholas Burkholder, Preston Edwards, Sr., and Libby Sartain. Hoboken, NJ: John Wiley & Sons. Jones-66 Tulgan, Bruce. 2001. Winning the talent wars. New York: W.W. Norton & Company. Van Leeuwen, Brenda, Jo Pieters, and Tom Crawford. 2005. Building Philips’ employer brand from the inside out. Strategic HR Review. 4: 16-19. Woodall, Katherine. 2002. Survival: Can branding save your organization? Communication World. 20: 10-15. Zemke, Ron, Claire Raines, and Bob Filipczak. 2001. Generations at work. New York: AMACOM. Jones-67 APPENDIX A INFORMED CONSENT FORM Talent Management at AC You are invited to participate in a study that will enhance AC’s understanding of the issues impacting recruitment and retention in the organization. In addition, this study is being conducted to fulfill the requirements of the class ORL 4901 Capstone Project. The study is conducted by Justin Jones. Results will be used to enhance organizational understanding and inform future strategic decisions and to receive a grade in the course. Justin Jones can be reached at email@example.com. This project is supervised by the course instructor, Dr. Robert Melvin, University College, University of Denver, Denver, CO 80208, firstname.lastname@example.org. Participation in this study should take about 30-45 minutes of your time. Participation will involve responding to approximately 30 questions about your experiences prior to and since joining AC. Participation in this project is strictly voluntary. The risks associated with this project are minimal. If, however, you experience discomfort you may discontinue the interview at any time. We respect your right to choose not to answer any questions that may make you feel uncomfortable. Refusal to participate or withdrawal from participation will involve no penalty or loss of benefits to which you are otherwise entitled. Your responses will be identified by code number only and will be kept separate from information that could identify you. This is done to protect the confidentiality of your responses. Only the researcher will have access to your individual data and any reports generated as a result of this study will use only group averages and paraphrased wording. However, should any information contained in this study be the subject of a court order or lawful subpoena, the University of Denver might not be able to avoid compliance with the order or subpoena. Although no questions in this interview address it, we are required by law to tell you that if information is revealed concerning suicide, homicide, or child abuse and neglect, it is required by law that this be reported to the proper authorities. If you have any concerns or complaints about how you were treated during the interview, please contact Dennis Wittmer Chair, Institutional Review Board for the Protection of Human Subjects, at 303-871-2431, or Sylk Sotto-Santiago, Office of Sponsored Programs at 303-871-4052 or write to either at the University of Denver, Office of Sponsored Programs, 2199 S. University Blvd., Denver, CO 80208-2121. You may keep this page for your records. Please sign the next page if you understand and agree to the above. If you do not understand any part of the above statement, please ask the researcher any questions you have. I have read and understood the foregoing descriptions of the study called Talent Management at AC. I have asked for and received a satisfactory explanation of any language that I did not fully understand. I agree to participate in this study, and I understand that I may withdraw my consent at any time. I have received a copy of this consent form. Signature Date Jones-68 APPENDIX B EMPLOYER BRAND QUESTIONNAIRE Thank you very much for your time today. As you may know, we have a significant recruitment effort underway. AC needs to continue to attract talented people at all levels in the company. In order to be successful in attracting new employees, it is important for us to be able to describe the work environment and culture of the company. We are reaching out to current employees like you to better understand life at AC. Your views will help us speak more clearly with potential employees about who we are and what we do. The results of this survey will be used to guide our message externally, to attract new employees, and internally, to reinforce the qualities that make AC a great place to work. Your thoughtful responses will be held in the strictest confidence. (I’ll ask each person to sign my DU confidentiality form). 1. Confirm business group, tenure, office location, title, age. 2. What first attracted you to AC? 3. What were the impressions you formed of the company as you went through the hiring process? 4. Since the time you started working at AC, how have your impressions changed, if at all? 5. If you had a friend just starting at AC, what advice would you offer him/her in terms of the things s/he should know to be successful? 6. What kinds of people don’t last here? Why? 7. From our previous brand survey, employees shared 4 top qualities that influenced their decision to work at AC. To what degree do you (dis)agree with each of these and why: • Challenging projects • Reputation of the company • Opportunity for Development • Stability of the company 8. If you could add one more attribute, what would it be? 9. What do you think AC is not so good at? 10. What do you think AC’s customers value most about the company? 11. Have you thought about leaving the company? If so, what kinds of things prompt you to consider leaving? If not, what keeps you here? 12. If you were writing an advertisement right now to attract newcomers to the company, what would you say? What would you say to differentiate AC from other engineering firms? 13. What advertisement messages would you stay away from? Why? 14. Is there anything else about your experience at AC that’s important to you but that we haven’t covered?
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