Thursday, August 21, 2008

Ouch! McKinsey Survey Says HR Can't Manage Talent

More bad news for the HR function. This just in from The McKinsey Quarterly Chart Focus Newsletter:

Realigning the HR function to manage talent
Although McKinsey surveys show that business leaders around the world are deeply concerned about the intensifying competition for talent, few companies make it an integral part of a long-term business strategy, and many even try to raise their short-term earnings by cutting talent-development expenditures. Other factors compound the difficulties of recruiting enough appropriate talent: minimal collaboration and talent sharing among business units, ineffective line management, and confusion about the role of HR, not to mention challenges such as Generation Y employees seeking greater work/life balance, expansion into global markets, and the specific needs of the fast-growing category of knowledge workers.

The exhibit below focuses on another problem: the declining influence of the human-resources function. Yet only HR can translate a company’s business strategy into a detailed talent strategy. HR professionals should assert their influence and provide credible and proactive business counsel and support for individual business units.
To find out more about how companies can bolster the HR function and successfully recruit and manage employees, read “Making talent a strategic priority” (January 2008).
So I did. More bad news. Here's what McKinsey had to say about HR in this report:
"The HR department’s declining impact and the dearth of talented people willing to serve there haven’t helped at all. McKinsey’s global organization structure database and work by the Saratoga Institute separately found that less than two-thirds of all HR directors report directly to the CEO. Recent UK salary surveys show that senior sales, finance, marketing, and IT managers earn up to 50 percent more than their HR counterparts. Our research confirms the idea that HR’s influence is declining. The executives we interviewed criticized HR professionals for lacking business knowledge, observing that many of them worked in a narrow administrative way rather than addressing long-term issues such as talent strategy and workforce planning (Exhibit 3). As one HR director explained, senior executives “don’t see us as having business knowledge to provide any valuable insights. We’re doing many things based on requests, and they don’t see HR as a profession.
Bolster HR
Ten years ago, HR specialists were preoccupied largely with formulating and managing standard processes—notably, recruitment, training, compensation, and performance management. We believed then, as we do now, that human resources should assert its influence over business strategy and provide credible and proactive counsel and support for the chiefs and line managers of individual business units. Only HR can translate a business strategy into a detailed talent strategy: for instance, how many people does the company need in order to execute its business strategy, where does it need them, and what skills should they have?"
OK, HR, here's an engraved invitation to your coveted "seat at the table": Help wanted -
Talent management.
Your company needs you. Are you up for the challenge?


Andres said...

Dan, What was the name and author of the article in the, "The McKinsey Quarterly Chart Focus Newsletter"? Was this in their most recent edition? Fascinating information ... provocative.

I'm afraid, "trying harder" probably isn't going to fix this mess. We need substantive changes to the HR certification process and required acumen in order to be taken seriously. Barring any bold change in the profession, the demise of HR may be inevitable.

Thanks for the info!

Dan McCarthy said...

T.C. -
There was no author for the intro, "Realigning the HR function to manage talent". It was more of a teaser to bring you to the site.
Authors for the January report were Matthew Guthridge, Asmus B. Komm, and Emily Lawson.

Anonymous said...

Thanks for sharing this and it should make people get off their seats and get excited - positively or negatively.

In my experience with "talent management", my belief comes from this statement which I heard from one of my HR colleagues state with authority, "HR is everyone's business." This was uttered in a talent management context - namely, how we can reduce employee churn to acceptable levels whilst developing a robust talent pipeline of high performers. The management team all looked at HR and said, you need to fix it. But in reality, it's not just HR's problem necessarily once you looked at the underlying reasons for the churn.

This statement has stayed with me and I agree with it. Any and all managers, are responsible for "talent management". Bad managers cause people to leave and individual managers need to take ownership of their people management responsibilities. To the extent that HR can provide training and coaching support for (poor) managers, they should. However, at the end of the day, HR doesn't "own" nor "manage" everyone in the company. I say, head of functions, senior managers, supervisors etc all need to step up and do their jobs and stop blaming HR for your not doing your job!


Dan McCarthy said...

Lui -
Thanks for that - very well said, and I agree 100%.
However, I get a little irritated when HR leaders use that premise as an excuse for not being willing to step and take a leadership role. In the McKinsey study, HR execs were asked what they thought the biggest obstacles to talent management were. The top 7 responses all pointed to management. While all of these are real, they come across sounding like excuses.

Bruce Lewin said...

Hi Dan,

This was a really useful piece and I've linked to it in a follow up I wrote called "Dismal, Disastrous, Ouch!" I tried to do a pingback, but I'm not sure if it worked, so I thought I'd say hello the old fashioned way!

btw, the piece I wrote is at

Best wishes,


Dan McCarthy said...

Bruce –

Thanks for the comment and link!

Your blog looks interesting, I just subscribed

Bruce Lewin said...

Thanks Dan, I'm just getting back into the swing of blogging after a big break...

THE AUTHOR said...

I am a forty year HR veteran having held many significant HR leadership positions around. Who says I was not at the table? My credentials to be on the table were better than all other business functions combined. As a HR professional I know full well what it takes to run a business (having run five of my own businesses) and also how to create the "right" people strategy for the business that employs me.

Want prove check out one my blog postings on my blog: What It Takes to Call What I Do a Profession.