Applying TQM to Recruitment And Talent Management Putting the right people in the right jobs using measurable, predictable, and actionable assessments Six Sigma; the data-driven methodology for eliminating defects in organisations based on standards, measurements, and repeatable processes, has provided undeniable success for organisations around the world by eliminating waste and improving productivity. So why hasn’t this TQM (Total Quality Management) concept of measurable and predictable error reduction been applied to Talent Management? TQM requires a system of precise measures – objective and accurate enough for statistical analysis. By contrast, the measurement of human work performance typically involves subjective and overly-general data that proves to be too fallible to support the level of accuracy that TQM requires. Total Quality Management (TQM) Comparisons1 Six Sigma Standard Error Rate Business Application 6 Sigma + 3.4 per million Airline flight safety (takeoff/ landing) 5 Sigma World-class manufacturing 4 Sigma 6 per 10,000 Manufacturing average 2 Sigma 30 per 100 IRS phone tax advice 1.6 Sigma 45 per 100 Typical employment selection and deployment 1Adopted from Carnegie Mellon Software Engineering Institute But now, as this article identifies, a measurable and quantifiable Six Sigma-like process has been defined and documented to help address these error-prone, human aspects of talent management. The initial requirement is an accurate measure of any individual’s skills, competencies, motivational drivers, work habits, and potential for developing future competencies. The assessment instrument must be criterion validated to be predictively accurate of measured productivity improvements and/or reduction in “unwanted” turnover well beyond the 55-65% accuracy most commonly reported. Research suggests that only a Six Sigma or TQM approach can accomplish the necessary level of quality improvement in the management of intellectual capital. Using a TQM approach requires focusing primarily on identifying the “causes of failure” of otherwise qualified individuals. This is in contrast to the more common identification of the causes of success as typically seen in job analyses and competency studies. A TQM approach is capable of establishing a single instrument that can measure all of the relevant competencies with an accuracy level robust enough to support substantial quality gains in the management of a company’s most valuable “Human” assets. The result is a Talent Audit system – an information repository where organisations have a complete inventory of strengths and weaknesses for all employees in every key position. This relational database can distinguish the job performance makeup of key talent located in a particular division anywhere in the organisation. Pain Point 1: Reducing Unwanted Turnover Deloitte, a global leader in professional services, stated in a 2005 article summarising their U.S. survey of human resource executives: “More than 70 percent of respondents say incoming workers with inadequate skills pose the greatest threat to business performance.” How does your organisation go about selecting the right personnel for targeted positions? If you are like most companies, you rely on subjective reviews and recommendations by internal personnel. In fact; according to CEO Magazine, (December 2005) “Internal performance reviews and 360-degree feedback systems are used by more than 95 percent of the largest 500 companies to evaluate employee performance.” And, “Reference checking is universally used as a means to assess candidates in pre-hire situations.” This article reviews the causes of ineffective talent management and how a Six Sigma/TQM approach helps minimise the following common “pain points:” • Reducing unwanted turnover • Weak succession planning • Losing top talent • Matching the right people to the wrong jobs • Training the wrong personnel. Though these methods do provide insights about an individual, the article goes on to say, “Reliance upon the subjective judgment of untrained evaluators make these methods untrustworthy measures of an individual’s intelligence.” Only through accurate skills matching can your organisation make the best use of your existing personnel and their potential. We suggest the use of a Talent Audit system that accurately and systematically predicts the effectiveness of hiring the right talent – and avoiding the wrong talent. Pain Point 2: The Need to Identify High Potentials: Weak Succession Planning Succession planning – the minimising of risk through appropriate compensation, recognition, and readiness of successors by identifying and training high potential employees – is an ongoing challenge for organisations of all sizes. Procter & Gamble is no exception. P&G’s leader, A.G. Lafley, told Chief Executive Magazine in September 2005, “Nothing I do will have a more enduring impact on P&G’s long-term success than helping to develop our leaders.” Unfortunately, succession planning is usually focused on a small number of key executive positions. But as studies today indicate, succession planning need not apply to just executives; it should be expanded to all levels in the organisation with the help of a Talent Audit system. In the sample Talent Audit Skills Report shown below (see Figure 2), “Sally Black” is currently a Project Manager with a number of weaker skills. Through traditional career development and succession planning Sally would probably be overlooked for future advancements. However, if Sally were moved into a Technical Support Manager role her skills would be maximised. This type of skills detection is made possible because a Talent Audit system reveals data that is definable, measurable, and actionable. Overall Success Probability Scores for Specific Sales Positions Pain Point 3: Losing Top Talent All organisations expect a certain amount of turnover. At low levels, turnover keeps the organisation fresh with new talent and ideas. But when turnover is high or unwanted, the result quickly turns negative, costing the organisation considerable time and money to hire and train new personnel . This pain associated with turnover intensifies when you consider that millions of Baby Boomers will retire over the next 15 years, leaving us with a shortage of talent and leadership. So what is the cause? Many organisations mistakenly believe that employees leave jobs primarily for better wages, benefits, or both. The real causes are quite different. Cause A: Poor Job Fit. Reports show that one of the primary causes of turnover is actually poor job fit. Employees become frustrated when they can’t do their jobs well. Talent audits demonstrate that as much as 65% of job dissatisfaction which leads to unwanted turnover is a result of these job mismatches. A systematic approach is needed to address the causes of poor job fit: 1. Identify sources and causes of failure for each position 2. Identify the key skills to overcome those failure points 3. Assess incumbents against the skills that ensure success 4. Continually conduct exit interviews to document turnover causes (the talent baseline is established for the organisation) 5. Analyse results periodically to determine the commonalities 6. Establish a plan to reduce the defects Cause B: Incompatibility with Management The other well-known cause of turnover is incompatibility between subordinates and their managers. As with any organisation, the responsibility to correct that error must lie with management itself. Ideally, management would do a statistical analysis to determine which managers are best in which jobs, managing which people. Historically, time and the vast amounts of data needed to perform that analysis have made that process prohibitive for most organizations – until now. The HR Chally Group in Dayton, Ohio has been dedicated to solving the problems associated with fallible and inaccurate skills assessments for over 30 years. By researching more than 75,000 managers and executives, in both Fortune 500 as well as midsized and small companies, Chally has developed the industry’s most statistically accurate job skills database. Through this database, identified skills were used to distinguish top managers in different management jobs from weaker or less-successful managers. Selection assessment scales were then developed to accurately measure the most important skills. Using the findings, five common and distinct types of successful managers surfaced: Line Executives and Managers • For sustaining companies, or • For startup/turnaround companies Staff Executives and Managers Corporate Profit Centre Managers Entrepreneurs Sales Force Executives Following up with the identification of which managers would thrive in which role, companies are able to improve the job match of managers and subordinates, reducing unwanted turnover, or worse, continually under producing, “less-engaged” employees. Pain Point 4: Matching the Right People to the Wrong Jobs There has been a great deal written about the pending talent storm and the shortage of appropriate talent. Through a Six Sigma approach to systematically capturing, defining, and measuring data, companies are finding that the problems around skills and job performance are more about skilled personnel in the wrong jobs, rather than a lack of available skills. There is some belief among executives that companies consistently underutilize the talents of their people, leaving a significantly untapped talent reserve. With the help of a Talent Audit skills database, companies can more accurately identify job performance skills and competencies, much like insurance companies use health and behaviour metadata to accurately access and predict their financial risk. Once the defects – are discovered, an action plan can be put in place to systematically remove the defects. A Talent Audit database can provide organisations with a complete inventory of strengths and weaknesses for all employees in every key position. In looking at the salesperson job function as an example, the Talent Audit identifies why job mismatch is so prevalent. Companies too often have one description for sales representatives, regardless of the customer need. A Talent Audit uses competency scores that have been developed from research that has identified a full range of unique sales positions and various sales roles according to their unique markets and customer needs. In the simplified example below (see Figure 3), seven sales types are shown demonstrating a talent-based audit system. For each position, statistically-predictive validations identify the critical failure points and the key skills needed to overcome those failures. For example, “Hunters” (new business development specialists) need skills such as qualifying prospects with standard probes and closing using logical, incremental steps. Meanwhile, “Farmers” (account management and growth specialists) need to be driven to produce increased sales to existing accounts. The chart below (see Figure 4) shows all of the specific, critical skills for the Account Manager (Farmer) role. For Example: Scale Scores for Predicatively Validated Sales Role Skills (Account Executive) By putting a talent audit to use, companies have been able to: • Identify salespeople most adept at developing new business • Determine which salespeople have the skills to move into management • Identify skill gaps that can be remedied with training • Discover which associates should support key accounts Pain Point 5: Training the Wrong Personnel Most estimates of effective training suggest that individuals can improve their skills by no more than 20%. This means that people in the wrong positions cannot be trained to become top performers, only that their “bad” skills can be improved to “not quite as bad.” Clearly, training is too expensive to waste on the wrong people. Four common challenges must be overcome for training to be effective: • Maximizing people strengths rather than overcoming weaknesses • Training the right personnel for the right jobs • Training the “most trainable” personnel • Focusing on the highest potential personnel In the attempt to address these challenges, companies frequently come to the same conclusion: Training needs to be flexible and tailored to each individual job function. The use of predictive job skill analytics such as those found in a Talent Audit database can help organisations tailor their training to the individuals that need it most. Many companies used a Talent Audit system to redesign their sales training to address the gaps.