Human Resources: Sophisticated talent management programs drive business results

NEW YORK, 24 May 2010 – Global organizations are meeting the demands of
today's economy by taking a more sophisticated approach to their talent
management programs, says a new report released today by Ernst & Young.

According to the report, Managing today's global workforce: elevating
talent management to improve business, leading companies have developed a
strategically aligned and integrated way of managing talent on a global level,
using these programs to successfully execute their overall business strategy
and ultimately drive revenue.

"An organization's commitment to executing its strategy effectively is directly
related to its ability to attract, retain and develop talent," says Bill Leisy, a
Principal with Ernst & Young LLP's Performance & Reward practice and an
author of the report. "Global organizations must understand the needs and
motivations of their people in order to provide opportunities that not only
appeal to different generations and cultures, but help the company retain the
necessary skills and competencies it will need to emerge stronger down the
road."

The report, entitled Managing today's global workforce: elevating talent
management to improve business is based on a survey of more than 340
global CEOs, CFOs, COOs and Vice Presidents of Human Resources from
Fortune 1000 companies around the world. The survey was designed to
examine the numerous components that make up successful global talent
management programs, and showcases how these practices differ across
geographic regions, companies and industries.

As the economy starts to improve, organizations are taking new directions
when it comes to managing their talent. Strategic HR initiatives are focused
on increasing employee engagement levels by building in flexibility to address
the needs of today's diverse pool of talent. According to the survey, the top
three talent management initiatives respondents plan to implement include:

- Building their internal talent pipeline to fill critical future needs (64%)

- Understanding and coordinating global talent resources to fill key positions
(33%)

- Offering flexible work strategies such as job sharing, telecommuting, flex
hours and phased-in retirement (31%)

This issue becomes even more challenging when factoring in talent shortages
around the world. Further review of the survey data shows that even though
developed countries have a slightly older workforce than emerging countries,
the one common element shared by all was the concern over future gaps in
talent among both technical (28%) and middle management (26%) positions.
These findings emphasize how vital it is for companies to align talent
development programs with their overall business strategy.

The dollars and sense of innovation in managing talent

According to the report, more than half (63%) of respondents say their
current talent management programs are aligned to the business strategy and
continue to be proactively modified to reflect changes in the direction of the
company. A separate analysis of the data shows that the group with better
alignment had significantly higher financial performance [a 20% higher annual
return on equity (ROE) over a five-year period] than those that did not. This
clearly demonstrates that today's leading employers are not only forecasting
budgetary needs, but also talent and skill requirements that will be necessary
to meet future business strategies.

"Your people are the key to competitive differentiation and success when it
comes to being a leader in today's marketplace," adds Leisy. "Leading
companies use their talent management programs as a critical part of their
overall growth strategy. Now more than ever, these programs are designed to
help execute companies' business strategies by recruiting, retaining, engaging
and developing the right individuals, with the right competencies, skills and
experiences. These are the activities that build market leadership."

While alignment to strategy is important, financial returns are improved when
every element of talent management programs, IT systems and processes are
fully integrated across the organization and on a global scale. According to an
additional analysis of the data, leading organizations with better integrated
talent management programs experience return on equity (ROE) that
averages 38% higher per year over a five-year period.

Unfortunately, many organizations are still not capitalizing on this opportunity
when it comes to integration. Only 32% of respondents say all the
components of their talent management programs are integrated on a global,
enterprise-wide scale versus 20% who only integrate their programs
regionally, 18% by business unit and 24% who do not integrate their
programs at all.

As the marketplace improves, this alignment and integration of talent
management programs will be critical to the financial and nonfinancial health
of an organization. In today's era of global growth, those who choose not to
review their current processes are likely to fall behind.

Raising the bar on engaging and retaining global employees

As companies incorporate international assignments into their overall business
strategy, the issue of career management for this employee group cannot be
ignored. Results of the survey show that even many leading companies still
need to address this issue. Nearly two-thirds of responding companies (60%)
have internationally mobile employees, yet among those organizations over
one-third has no talent management program in place for this unique
employee population.

"It is vital that not only are a company's internationally mobile employees
incorporated into the organization's overall talent management program, but
that there is a system in place to capture their knowledge," says Esther
Hahm, a Partner with Ernst & Young's Human Capital practice and an author
of the report. "With many respondents indicating that repatriation or post-
repatriation of these employees is not a priority, companies end up losing
much of the value they bring to the organization. This could result in
disenfranchised employees who will likely leave and take their international
experiences with them."

A 360 degree view to talent management

In today's economy, it is critical for global companies to understand and meet
the needs of these mobile employees, while maintaining a strong grasp of
relevant labor laws, legislation, regulations and demographics unique to each
jurisdiction where they conduct business.

Managing global talent effectively requires real execution from workforce
analytics to succession planning. Forward-thinking companies have talent
management programs that are aligned to the business strategies, integrated
globally and customized to address the needs, issues and demographics of
their workforce. If executed well, such programs will position these
organizations for significant future growth.

About Ernst & Young
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services. Worldwide, our 144,000 people are united by our shared values and
an unwavering commitment to quality. We make a difference by helping our
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