December 17, 2009

Hackett Research Alert: Companies with Mature Talent Management Capabilities See 18 Percent Higher Earnings, Other Benefits

  • Study Quantifies Broad Range of Performance and Operational Improvements Seen by Companies with More Mature Talent Management Capabilities

ATLANTA & LONDON, December 17, 2009 - Companies with more mature Talent Management capabilities reap strong bottom-line benefits, including earnings that are 18 percent higher than typical Global 1000 companies, according to a new study from The Hackett Group, Inc. (NASDAQ: HCKT).

Hackett's research found that the improved performance of talent management maturity leaders enabled them to generate an additional $673 million in additional EBITDA earnings for a typical Global 1000 company (with $26.38 billion in revenue). The study, which examined the performance at more than 60 companies over a three-year period, found that in addition to higher earnings, leaders saw significantly improved net profit margin and greater return on equity and assets.

Hackett's research, which collected data on 19 measures of performance and benefits to organizations, identified a wide range of other enterprise-wide payoffs seen by talent management maturity leaders. Leaders were able to create stronger organizations that better motivate and manage their talent and had clear advantages over typical companies in key areas such as the ability to create and sustain strong corporate cultures, retain both overall employees and specifically top talent, and plan for changes in skills supply and demand.

From an operational standpoint, talent management maturity leaders outperformed typical companies across an array of efficiency and effectiveness metrics. Leaders showed superior ability to increase overall employee engagement, faster recruiting cycle time, and greater linkage of talent management to business strategy. Their talent management professionals were also significantly more productive than those at typical companies.

Hackett's research offers a comprehensive profile of how talent management maturity leaders operate differently from typical companies, and how companies can improve their performance in this area. Leaders achieved impressive results by creating an integrated set of talent management capabilities aligned with their business and talent strategies. They more carefully cultivate the appropriate organization and culture, focusing on people-management skills of managers and supervisors and employee engagement, the research found. They have a greater focus on improving the processes by which talent needs are identified and appropriate individual staff are acquired, developed, managed, and measured. Finally, leaders are more advanced at measurement and make more effective use of technology to enhance talent management processes and activities. While they don't necessarily spend more, they more effectively rely on technology to enable information access, track talent management development, and enable improved decision-making.

"It's easy to find companies that feature talent management in their strategic plans and reports to shareholders. But truly, most do little more than pay it lip service. They stick to the basics because they don't truly understand the impact of improving their talent management capabilities," said Hackett HR Advisory Practice Leader Stephen Joyce. "With this research we're clearly quantifying the price most companies pay for their lack of commitment. By ignoring the strategic value of talent management and failing to develop a comprehensive program that drives top performance in this area, companies are missing the opportunity for a triple payoff - an enhanced bottom line, better performance across the enterprise, and improvements in specific talent management processes."

According to Hackett Managing Director of HR Transformation Harry Osle, "The kind of results we're seeing in this research are very achievable. But companies need to start with a comprehensive transformation effort, to free up both staff and budget. They then can utilize the freed up staff and budget to drive significant talent management improvements. We've worked with companies to drive improvements in key talent management areas such as succession planning, recruitment, and learning and development, and seen them generate significant cost savings while also improving effectiveness. These companies were better able to attract high-quality staff, retain key talent, and develop the skills they need to support strategic business goals, and the focus on people also has a measurable impact on business performance."


About The Hackett Group

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory firm, is a leader in best practice advisory, benchmarking, and transformation consulting services, including shared services, offshoring and outsourcing advice. Utilizing best practices and implementation insights from more than 4,000 benchmarking engagements, executives use Hackett's empirically based approach to quickly define and prioritize initiatives to enable world-class performance. Through its REL brand, Hackett offers working capital solutions focused on delivering significant cash flow improvements. Through its Hackett Technology Solutions group, Hackett offers business application consulting services that helps maximize returns on IT investments. Hackett has worked with 2,700 major corporations and government agencies, including 97% of the Dow Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 and 45% of the FTSE 100.

Founded in 1991, The Hackett Group was acquired by Answerthink, Inc. in 1997. Answerthink was renamed The Hackett Group, Inc. in 2008. The Hackett Group has global offices in the United States, Europe and Asia/Pacific.