Talent Management Strategies for a Flat World

1. Talent Management Strategies for a Flat World Steve Ashton Director, Organizational Effectiveness HRANB, March 2006

2. The Flattening World • In his best-selling book “The World is Flat” Thomas Friedman highlights the impacts of globalization on North America. • The impact of technology (e.g. wireless, internet) and reduced barriers to doing business anywhere in the world is making it easy to access new, highly capable and often cheaper sources of labour (outsourcing). • Along with greater efficiencies of global supply-chain-management, this is driving down prices (good for consumers), increasing profits of large-scale players (good for Walmart & UPS), but challenging North American workers and smaller companies to find their place in this new world order.

3. GLASS HALF EMPTY Lower Wages at Home More Competition Lower Profits Labour Unrest Challenges in Education & Skills GLASS HALF-FULL Greater Access to Talent New Markets Lower Prices for Consumers New Partnership with Labour Education as Competitive Advantage & A Key Export Opportunity Impacts on North America “When I was growing up, my parents told me, ‘Finish your dinner. People in China and India are starving.’ I tell my daughters, ‘Finish your homework. People in India and China are starving for your job.’” - Thomas Friedman, in Wired magazine, May 2005

4. The Canadian Context • Canada is currently witnessing one of the strongest economies of the OECD nations, yet our future is at risk if we do not address significant challenges in the following areas: • Demographics • Education • Immigration • Productivity & Innovation

5. 1. Challenges in Demographics • The world’s population will increase by approximately 2 billion to 8 billion by 2020, with most of that growth taking place in today’s developing countries – notably China, India and Indonesia. • A host of factors will boost global migration through 2020, making even the most homogeneous states more diverse. • By 2050, the number of older persons globally will exceed the number of young (under 15) for the first time in history. • By 2026, one in five Canadians will be 65 year of age or older – up from one in twenty in 1921 and one in eight in 2001. • More than 40% of the owners of Canadian SMEs – about 400,000 people – plan to retire in the next five years, and less than a third have formal succession plans. Sources: National Research Council of Canada, “Looking Forward: S&T for the 21st Century”; Statistics Canada and Health Canada.

6. 2. Challenges in Education • Only 5% of North American students earn a degree in Science & Technology versus 43% of students in China. • Initial reports show that in 2004 the United States graduated 70,000 undergraduate engineers, while China graduated 600,000 and India 350,000. • According to the Conference Board’s recent study on Canada’s competitiveness with other OECD Countries, Canada rated poorly for the number of science, math, computing and engineering grads in the labour force between the ages of 25 & 34. • In the skilled trades, 64.4% of respondents to a survey by Skills Canada reported problems finding employees with the necessary skills…yet 42% of 13-24 year olds are not interested in the trades as a career. • Atlantic Canada has typically had lower enrolments in the Community College System than the rest of Canada. Sources: National Research Council of Canada, “Looking Forward: S&T for the 21st Century”; Conference Board of Canada; Deloitte & Touche presentation on Talent Management (2005).

7. 3. Challenges in Immigration • Atlantic Canada, and in particular Nova Scotia, is failing to attract and retain immigrants: • Each year, approx. 220,000 immigrants come to Canada, but Atlantic Canada has attracted only 1.2 – 1.5% of new Canadians since 1999….and it is getting worse. • While the other three provinces are stable, Nova Scotia is not only attracting fewer immigrants, but 62% of those who immigrated between 1991 – 2001 left the Province. • If China, India and Eastern Europe continue on their present course, there will be greater domestic opportunities for the best and brightest young people. Canada could therefore experience a brain drain of both highly skilled immigrants back to their homelands and of Canadians. Sources: Citizenship & Immigration Canada; Metropolitan Immigrant Settlement Association; National Research Council of Canada, “Looking Forward: S&T for the 21st Century”

8. Immigration to Atlantic Canada Source: Citizenship & Immigration Canada, Facts & Figures 2004

9. 4. Challenges in Productivity & Innovation • According to Statistics Canada, in 2004, Canadian businesses recorded their worst performance in labour productivity growth in eight years. As the US is increasing its productivity, Canada is falling further behind. • Canada ranks 14th in OECD countries in management…has fewer S&T workers than many other advanced economies and lacks experienced venture capital fund managers. • Canada is coming to be treated as an incubator for both high-quality people and effective corporations that then move and develop elsewhere. Sources: National Research Council of Canada, “Looking Forward: S&T for the 21st Century”

10. The Important Role for HR • In stepping up to these challenges, we must: • Be aware of, and educated on, the competitive issues facing our organizations in a global economy • Engage our leaders and employees at all levels in this conversation • Identify and develop specific strategies to address the most prevalent issues to our organizations • Measure the impact of our efforts and continually improve • Engage in partnerships in the broader community

11. Talent Management at a Glance • Strategic HR Planning • Setting the Vision for the Future • Workforce Planning / Scenario Testing • Recruitment & Selection • Competencies, values, assessing future fit • Performance Management • Setting Clear Goals & Objectives • Measuring & Coaching • Aligning Rewards to Achievement • Talent Development • Assessing talent pipeline • Development planning • Succession planning

12. 1. Strategic workforce planning • Driven by business strategy & scenario testing • Informed by forecasting (internal and external) • Demographics & Market Forces for Talent • Internal Skill Gaps • Requires business units to have firm understanding of skills required to deliver on their objectives • Examples at Aliant: • Resource Planning Council • Aliant Corporate Transformation (People & Culture) • Aliant Three-Year Learning Strategy

13. Strategic Staffing Model Source: Strategic Staffing: A Practical Toolkit for Workforce Planning, Thomas P. Bechet (2002)

14. 2. Recruitment & Selection • Forecast drives proactive recruitment strategies • Measure against values and competencies (hard & soft) • Track what works and what doesn’t (e.g. attrition, client and candidate feedback) and adjust accordingly • Examples at Aliant: • Behavioural Event Interviewing • Hiring linked to Aliant Values • Competency Based Assessments (e.g. Solutions Sales) • References / Background Checks • Service Level Agreements and Client Quality Surveys

15. Talent ContinuumImportance of Investing at Every Stage

16. 3. Performance Management • Create a culture of continuous improvement • Measure performance and hold people accountable – both for their own performance, and for coaching and helping others improve. • Linking variable pay to performance works best if employees can see how they contribute to business results (communication; business acumen) • Examples at Aliant: • Balanced Scorecard & Communications on Company Direction set the context • Annual Goals & Objectives with 2-3 interim reviews • Short term and Long Term incentive programs linked directly to Balanced Scorecard with individual performance multiplier

17. 4. Talent Development Process Talent Review Composite profile of each employee. Consensus of leadership team. Development Plans Customized plan based on feedback from the Talent Review & employee career aspirations Assessment Against Values & Leadership Competencies Coach and Measure Progress Provided by manager

18. Succession Planning

19. Developing Leaders at Every Level • Leadership Development is “an organization’s conscious effort to provide its managers and potential managers with opportunities to learn, grow, and change, in hopes of producing the long term cadre of managers with the skills necessary to function effectively in the organization.” • Development is organizationally specific • Development is part of a long-term business plan • Development involves providing opportunities • Development is a conscious effort • Examples at Aliant: • Leadership Development Programs • Leading Through Effective Communications • Individual Development Planning • Succession Planning Source: McCall, Lombardo and Morrison. 1988. The Lessons of experience: How Successful Executives Develop on the Job.

20. Measuring the Impact of HR • Human Resources is under the gun to produce better evidence of their impact: “The HR department is in survival mode. As outsourcing the function becomes a more prevalent option for companies, HR managers know that if they are going to endure, they have to deliver strategic value, and that value has to be measurable.” “The New Human Capital Metrics” CFO.com (Feb 15, 2006) “The training person said that 80% of employees have done at least 40 hours in classes. The chairman said, ‘Congratulations.’ I said, ‘You’re talking about the activities you’re doing. The question is, what are you delivering?’” Dave Ulrich quoted in “Why We Hate HR” Fast Company (August 2005)

21. Measuring What MattersLessons from a recent Conference Board of Canada Event • Link HR initiatives to the business goals and critical success factors • e.g. Balanced Scorecard • Engage business unit leaders and key sponsors • e.g. Enterprise Learning Strategy • Understand how your business measures ROI • e.g. how does your return on HR investments compare to corporate hurdle rates for investment? • Don’t wait for perfection – just start. • e.g. Caterpillar University; Canada Post • Measure regularly and update forecasts as you go; focus on deviations from plan.

22. Some Final Thoughts to Consider • Human Resources has never found itself in a better and in a worse position in the company: • Our CEOs and senior leaders are interested in talent and want to invest in people • They are seeking someone to demonstrate leadership • To seize this opportunity, HR professionals must be well-informed on the issues, understand our organization’s critical success factors, and execute on strategies that demonstrate measurable improvements. If we fail, others will step in. • We cannot do this alone – partnerships with others in business, the community and government will be critical to tackling the issues and challenges of the ‘flat world.’

23. Discussion / Q&A If Steve didn’t use up all the time

24. Some Cited Sources • The World is Flat: A Brief History of the Twenty-First Century, Thomas L. Friedman, Farrar, Straus and Giroux, 2005. • “Looking Forward: S&T for the 21st Century” - National Research Council of Canada, August 2005 (available on their website at www.nrc-cnrc.gc.ca) • “The New Human Capital Metrics” - Craig Schneider, CFO Magazine, February 15, 2006 (available on www.cfo.com) • “Facts & Figures 2004 Immigration Overview: Permanent Residents” is available through Citizenship & Immigration website at www.cic.gc.ca