While US employers currently strike an even balance
between “building” talent from within and “buying”
talent in the form of new hires, the current economic climate and
labor market appear to be shifting this balance, according to a
new survey on managing and measuring reward program investments
from Mercer Human Resource Consulting.
The Web-based, national survey of more than 300
large employers shows that:
- Half (51%) describe their company as currently having an even
balance between “buying” and “building”
talent.
- Most of the remaining survey respondents are fairly evenly split
between a strong preference for building (25%) or buying (22%).
When asked whether their “build vs. buy”
strategy will change in the future:
- 40% said it will remain the same
- 37% expect to “build” more
- 15% expect to “buy” more.
- The remainder were unsure.
The shift is most pronounced among companies whose
current strategy is to buy talent. More than half (56%) said they
expect to build more in the future. “Cultivating talent from
within requires a different approach to talent management,”
says Peter Lupo, a senior reward consultant in Mercer’s New
York office. “Because of this anticipated shift, we expect
to see organizations making greater investments in such areas as
training, career development, succession planning, and identifying
high-potential employees.”
The “build vs. buy” shift is consistent
with other survey findings, Mr. Lupo notes. The employers surveyed
cite attracting/retaining the right employees as their top reward
program challenge over the next 12 months (83% cite this issue as
“very important” and 16% cite it as “somewhat
important”). Differentiating high performers ranks second
on the list of current concerns (78% and 21%, respectively), and
cost control is third (75% and 23%, respectively).
Other findings
-
Just 17% of the respondents said their current reward programs
support the organization’s talent requirements to a great
extent. The majority (69%) said their reward programs support
their talent needs to a moderate extent; 14% felt there was
a minimal connection between their organization’s reward
programs and talent needs.
-
External benchmarking is the technique most commonly used
to make decisions about how to allocate reward investments (used
by 75% of the employers surveyed), followed by best practices
among other organizations (65%), and employee surveys or other
employee feedback (48%). Few companies (29%) assess workforce
trends based on internal statistical modeling of workforce patterns
to guide their reward investment decisions.
-
One-fifth of the respondents (21%) said they are “highly
confident” in their current approaches to allocating reward
dollars. More than two-thirds (67%) are somewhat confident that
their organization’s techniques will yield the desired
results, and the remainder (10%) are minimally or not at all
confident in their current methods for making reward investment
decisions.
“It’s clear from the survey responses
that most organizations see potential for improving the alignment
between their reward programs and talent needs,” Mr. Lupo
says. “A major hurdle in creating this alignment is that organizations
don’t always have the data they need for making effective,
large-scale people decisions. That’s why we see the heavy
reliance on benchmarking and best practices — in essence,
using what has worked for other employers. “To make better
decisions, organizations need to get a handle on their current investment
in reward programs, what kind of return they are getting on that
investment, and whether there are ways to reallocate some investments
to generate greater returns,” he says.
The complete results of Mercer’s Measuring
the Return on Reward Investments survey are available free of charge
at www.mercersnapshot.com.
Mercer Human Resource Consulting serves clients
from 142 cities in 40 countries worldwide. The company is part of
Mercer Inc., a wholly owned subsidiary of Marsh & McLennan Companies,
Inc.
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