From talent management to talent optimization
William A. Schiemann *
Metrus Group, 953 Route 202, Somerville, NJ 08876, USA
The term ‘talent management’ has been around for quite some
time, but definitions abound around the globe, applications are
varied, and a plethora of measures—most tactical—are currently
being used. Furthermore, while senior executives have begun to
embrace ‘talent management,’ they are often embracing different
things. Many have appointed Chief Talent Officers with widely
differing responsibilities; some focus only on leader development,
others on various employment stages from hiring to retention, and
still others focus on organizational design and processes. While
multinationals seemingly desire to standardize such definition and
applications, this author has found multiple uses of the term across
U.S., European, and Asian operations of the same firm for example.
Putting aside all the confusion, here is a key question: Is talent
management a unique concept or simply a new label for the ‘‘old
wine’’ of leader development, succession, on-boarding, training, and
so forth?
This article addresses how the concept of talent management is
of both theoretical and practical value. More specifically, I address
these questions:
 What is talent management?
 What is the talent lifecycle and why is it important? The talent
lifecycle—from attracting and acquiring talent to onboarding,
developing, managing, retaining and even recovering talent—
captures the myriad ways in which an organization interacts
with talent.
 How do we know when talent investments have been
optimized? The concept of People Equity (Schiemann, 2006) is
one potential framework for addressing this question. Some of
the theoretical underpinnings and empirical research related to
People Equity, as well as examples of its practical use across
country borders, are discussed.
Next, I will address how the People Equity framework can
inform investment decisions about how best to manage human
capital and the talent lifecycle. For example,
 Are organizations attracting talent that is not only capable but
also a good fit?
 Are recruiting and selection strategies effective?
 Are we onboarding talent in such a way that it becomes
acculturated?
 Do performance management processes help optimize human
capital investments?
 Are we identifying and selecting potential leaders who can
optimize talent investments?
Finally, a key issue is the measurement of human capital
investments, and more specifically, talent optimization, which is
highly fragmented. This article will discuss how the People Equity
framework—one which is eminently measurable across countries
and cultures—serves as a universal bridge between important
individual and business outcomes, such as turnover, financial
performance, quality, productivity, customer retention, and organizational
processes and policies that drive high or low talent
optimization. An example of its use across countries and regions is
presented.
1. What is talent management?
Before tackling talent management, it is imperative to define
‘‘talent.’’ Definitions of talent abound. Ulrich proposed that it
Journal of World Business 49 (2014) 281–288
A R T I C L E I N F O
Article history:
Available online 10 December 2013
Keywords:
Talent
Talent management
Employee lifecycle
Talent measurement
People Equity
Human capital
A B S T R A C T
The term ‘talent management’ has been around for quite some time, but definitions abound around the
globe, applications are varied and a plethora of measures—mostly tactical—are currently being used. This
article addresses how the concept of talent management is of both theoretical and practical value in any
industry or geography. How can we know when talent investments have been optimized? What is the
talent lifecycle and why is it important? Additionally, the article presents and illustrates the People
Equity framework that serves as a global bridge between important individual and business outcomes
such as turnover, financial performance, quality, productivity, customer retention, and organizational
processes and policies that drive high or low talent optimization.
ß 2013 Elsevier Inc. All rights reserved.
* Tel.: +1 908 231 1900.
E-mail address: wschiemann@metrus.com
Contents lists available at ScienceDirect
Journal of World Business
journal homepage: www.elsevier.com/locate/jwb
1090-9516/$ – see front matter ß 2013 Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.jwb.2013.11.012
equates to the combination of ‘competence, commitment and
contribution’ (Beechler & Woodward, 2009). McKinsey &
Company defined ‘talent’ as ‘the sum of a person’s abilities . . .
his or her intrinsic gifts, skills, knowledge, experience, intelligence,
judgment, attitude, character and drive. It also includes
his or her ability to learn and grow’ (Michaels, Handfield-Jones, &
Axelrod, 2001, p. xii). In interviews conducted by the author with
senior executives, some use the term ‘talent’ to refer to key
employees such as executives or managers. For purposes of this
paper, I define talent as the collective knowledge, skills, abilities,
experiences, values, habits and behaviors of all labor that is brought
to bear on the organization’s mission. This definition is broader
than some and reflects the author’s bias of thinking about labor
investments holistically. Think about what capability is added to
or subtracted from the organization as a result of acquiring or
losing a person. This labor may be in the form of employees, but it
could be contractors, outsourced labor, or other forms of labor
supply.
Talent management is a unique function that integrates all of the
activities and responsibilities associated with the management of
the talent lifecycle regardless of geography—from attracting and
acquiring talent to developing and retaining it. A key measure of
success is the ROI1
on the investment of talent as a resource, when
the ‘return’ is considered broadly to include benefits beyond
financial ones alone.2
Consider an example. If two restaurants
within a quick-serve chain invest in 20 employees per restaurant
and one achieves 20% higher sales than another, that restaurant is
providing a higher return on the labor dollars invested. Or, if they
both achieve the same sales, but the average labor cost invested in
one is 10% less than the other, it too has achieved a higher return on
invested talent. We could generalize this then to two competing
burger chains operating in the same territories with approximately
the same supply and capital costs. If one is able to leverage its
talent investments more than the other, the shareholders will
achieve a higher return on investment, other things being equal. In
this situation, how well talent is leveraged will provide a
competitive advantage.
To accomplish the higher return, multiple people in the more
competitive organization are doing something with talent that
enables it to leverage this important asset better than the other
competitor. This might include the restaurant manager, policies
driven by HR and senior leaders, a coach or leader of the restaurant
managers, or even a recruiting firm—essentially anyone who
touches the talent lifecycle in a way that enables talent
investments to be leveraged effectively. For example, a common
way in which this is done is through better training. In a recent
study with one fast-food group, access to training has been found
to be a major driver of business performance. Restaurant
managers in the heat of competitive battle, or meeting cost
targets, might short circuit the complete training program,
figuring that employees in this industry turn over quickly. But
that thinking was proven faulty because those who did not train
their employees effectively experienced a significantly higher
incidence of job failure. This led to greater staff turnover. Access to
training enabled employees to be successful in front of customers
and to stay on the job longer, spreading hiring and replacement
costs over a longer period of time. The managers who provided
effective training had lower overall labor costs, despite investing
time and money in training.
2. What is the talent lifecycle and why is it important?
The talent lifecycle encompasses all of the stages of interaction
between an organization and its human capital. This ranges from
building a talent brand that attracts the right talent to acquiring,
onboarding, developing, managing, retaining and even recovering
talent (see Fig. 1). Organizations touch people in many profound
ways before, during and after they are embedded in the
organization. Notice the word embedded and not employed.
Long-term contractors, outsourced labor, or other labor market
intermediaries (LMIs) (Bonet, Cappelli, & Hamori, 2013) are more
prevalent today across country boundaries, but have many of the
same important characteristics as employees. These people can
partner with the organization for a long or short time. They can
provide discretionary effort or not. They can work hard or work
smart in ways that are more aligned with the organization’s goals.
They can take the extra step to stay abreast of their areas of
expertise or not. In short, all forms of labor are important in
innovating, producing products or services, recommending new
employees, and providing a positive or negative image of the
organization. The difference between those incredibly positive
behaviors and neutral or negative ones can spell the differences
between success and failure for the organization.
The talent lifecycle is the path upon which most people
interact with the organization. Talent management is the way in
which the talent lifecycle is managed. How well that lifecycle is
managed will determine the level of effectiveness of those talent
investments.
Talent optimization means that the organization has balanced
talent acquisition, development, performance and retention strategies,
processes and policies so that it maximizes the outcomes of those
talent investments—higher employee productivity, greater customer
retention or purchasing, higher quality, higher retention of
desired employees, reduced regulatory or environmental risks, and
strong operational and financial performance.3
A growing challenge
today is doing so across country and cultural differences.
Let us consider two examples. Because of Google’s employer
brand—a cool, innovative, and liberal but demanding employment
environment—it attracts the best and brightest around the globe.
Fig. 1. Talent lifecycle.
1
ROI here could include financial and non-financial value to the firm, such as
gains or losses to reputation.
2
For purposes of this paper, ROI is considered from the organization’s point of
view. It is acknowledged that there are other forms of value such as societal ones
(e.g., creating employment) or individual ones (career growth or fulfillment), but
the focal point of this paper is the value to the organization.
3
It might also be argued that it would be even more valuable to society if the
organization did these things in a way that also enhanced sustainability or
individual outcomes, such as career growth, better health outcomes, or enhanced
life fulfillment (Wirtenberg, Harmon, Russell, & Fairfield, 2007; Wirtenberg, Lipsky,
Abrams, Conway, & Slepian, 2007).
W.A. Schiemann / Journal of World Business 49 (2014) 281–288282
At one time, Google had approximately 10,000 resumes being
submitted each day. At that rate, it could pick and choose the most
desirable talent in almost any country. But who the company
chose, how it acculturated and developed them, and how it
managed performance influenced whether Google retained top
performers, innovated new products, and delighted customers
(Bryant, 2011). Google is managing thousands of ‘best and
brightest,’ and they all won’t be at the top of the performance
curve. Google faces an important challenge in hiring those who will
‘fit’ the Google culture, regardless of their home culture—being
smart only opens the door to an interview. Expectations set during
the interview process and during onboarding and acculturation
are important, so that entering ‘super stars’ in their former lives
won’t be disillusioned if they are just average at Google.
Performance reviews will need to be handled in a way that
doesn’t demotivate these ‘stars.’ Rewards will have to measure up
to a ‘top place to work.’ Every organization faces similar
challenges—how to telegraph an employer brand to the local or
global labor market and then refine hiring, development,
performance management, and corporate values to create a
coherent work environment that retains the best performers,
achieves high productivity, maximizes customer outcomes and
helps grow the organization’s value.
Yahoo provides another example. Recently it was reported that
CEO Marissa Mayer issued an edict that all Yahoo employees must
now work in their office cubicles rather than remotely (Miller &
Rampell, 2013). Young, technology-savvy individuals don’t react
well to ‘you-must’ imperatives. They are used to working odd
hours, which often stimulate creativity and productivity. The move
by the CEO was apparently taken to curb abuses by some. It created
the risk, however, of demotivating a majority of the workforce,
who might well see competitors in their industry as more
attractive. Top performers always have choices. They could
abandon Yahoo for a competitor, leaving the compliant and those
with fewer options as the default employee profile. Furthermore,
the extensive public awareness of this new edict is likely to reduce
the interest of potential new hires. The creative employer brand of
Yahoo was all of a sudden in conflict with work edicts more typical
of a manufacturing plant or a call center.
3. What is People Equity and how can it help in managing the
talent lifecycle?
In this section, we will examine the People Equity (Schiemann,
2006) framework and its potential as a lens to understand and
manage talent more effectively, regardless of industry or global
location. Later, an example will be presented of how this concept
can be measured across different countries and regions.
People Equity is defined as the collective state of Alignment,
Capabilities, and Engagement (or ACE for short) in an organization:
 Alignment is the degree to which everyone in the organization is
rowing synchronously in the same direction. Strong alignment is
indicated by behaviors that are aligned with goals, customers
and the brand. Horizontal alignment—units working synchronously
together across structural boundaries—is also quite
important.
 Capabilities are defined with the customer in mind. It is the
extent to which competencies (e.g., knowledge, skills), information,
and resources are sufficient to meet internal or external
customer expectations.
 Engagement is comprised of three factors: satisfaction (e.g.,
Abraham, 2012), commitment (e.g., Bakker & Schaufeli, 2008;
Dansereau, Cashman, & Graen, 1973; Graen, 2013; Meyer &
Allen, 2007), and advocacy (Tsarenko & Mikhailitchenko, 2012).
The former two factors are state engagement constructs (Macey
& Schneider, 2008) while advocacy includes extra-role behaviors—actions
beyond the minimal requirements of the role.
These could include innovative behaviors, extra time in role
activities, or going out of the way to recommend the organization
to potential employees, customers or others. Its conceptualization
in the People Equity model includes both the affective states
that create the condition for this discretionary effort (satisfaction
and commitment) and a willingness to take actions on behalf of
the organization or others in the organization. For example,
when basic satisfaction drivers—job security, compensation and
benefits, fairness—dropped in difficult economic conditions,
engagement plummeted (Seibert & Schiemann, 2010). In
contrast, when satisfaction and commitment are high, organizations
that can also achieve high advocacy—such as endorsing the
organization publicly—have the highest engagement.
Ralph Izzo, CEO of Public Service Enterprise Group (PSEG),
encapsulates the three elements, saying: ‘‘To be successful, you
need great leaders who know how to optimize their talent by focusing
it, developing the right capabilities, and creating engagement’’
(Schiemann, Seibert, and Morgan, 2013). If talent is managed well,
People Equity should grow and we believe that high ACE is a surrogate
for high talent optimization.
4. The evidence
People Equity can impact a variety of important organizational
outcomes, including higher financial performance, greater quality,
and lower employee turnover (Schiemann, 2006; Kostman &
Schiemann, 2005). Subsequently, additional research on multiple
continents (Borg, Groenen, Bilsky, Jehn, & Schwartz, 2010;
Schiemann, 2009b) has not only validated this in a variety of
organizations and industries, but also extended our understanding
of the power of ACE to explain and predict important outcomes.
Consider some large-scale, cross-industry findings:
 In a study of 2041 companies from 30 industries, Kostman and
Schiemann (2005) found a high correlation between People
Equity and financial performance, quality and employee
turnover. For example, top-quartile People Equity companies
had one-half the turnover that bottom quartile companies
reported.
 Seibert and Lingle (2007) found that People Equity and a quality
culture (e.g., support and use of six sigma, lean) were strongly
connected. While improving either People Equity or quality
processes alone improves performance, the combined effect is
multiplicative, often yielding a fourfold increase in performance.
This may explain the criticality of not only designing and
applying quality processes and principals, but also improving the
alignment, capabilities and engagement of those who will use
them.
 Seibert and Schiemann (2010) found that internal value was also
related to ACE. That is, if we improve ACE in our internal staff and
supply-chain functions (e.g., HR, IT, Finance, R&D, Marketing,
Manufacturing), it also enhances financial and customer outcomes.
In the case of internal staff functions, high People Equity
departments are rated as delivering far higher value than low
People Equity units.
 Thomas Belker, the CHRO of OBI Group, the largest retailer in
Europe, has validated that Engagement alone was not enough to
move beyond modest improvement levels, but when adding a
focus on Capabilities and Alignment in particular, OBI Group
experienced breakthrough results (Belker, 2012).
One could easily make a case that high People Equity (ACE) is a
reasonable surrogate for how well talent is optimized in an
organization. In the prior studies, ACE accounts for a large
W.A. Schiemann / Journal of World Business 49 (2014) 281–288 283
percentage of the variance in many important business outcomes
as well as individual outcomes such as turnover.
5. Using People Equity to inform talent investments
So how is ACE, in turn, influenced by how we manage talent and
how we manage the talent lifecycle (see Fig. 1)? Below are some
practical ways in which an ACE lens can be used to evaluate and
understand how well talent processes are working.
Talent acquisition. Do recruiting and selection strategies lead to
hires that become high ACE employees? Industrial and Organizational
Psychologists tell us that we are lucky to hit 60 percent
success rates in hiring (Levin & Rosse, 2001); many organizations
do far worse. If we look at hiring as a series of processes that help us
find hires that will be highly aligned, capable, and engaged, then
hiring successes and failures are easier to understand.
Competencies are rarely the issue in large organizations
because most have used validated selection tools that are typically
good at identifying skills, abilities and experiences that are
important for job success. Many organizations, however, are less
well equipped to identify those who will be likely to become
aligned and engaged with the mission and culture. In a recent series
of executive roundtables conducted by the author and his
colleagues, ‘‘fit’’ is often cited as the biggest reason for hiring
failures. When asked to describe fit, these managers typically cite
alignment with the organization’s goals, values, or culture or a
failure of the individual to become engaged in the organization.
The interview, which is notoriously unreliable as used in many
organizations (Carlson, Thayer, Mayfield, & Peterson,1971; Heneman,
Schwab, Huett, & Ford, 1975; Mayfield, 1964), is a tool that
could be used more effectively to identify in advance the
likelihood of a new hire being aligned and engaged in the new
organization. For example, by standardizing interviews and
calibrating interviewers, reducing interviewer stereotypes, balancing
the order of negative and positive information, probing
areas of alignment and engagement, and scoring candidates on
these factors, the interview could become a stronger tool in the
identification of poor fits (Schmitt, 1976). This is one reason why
internal hires are typically more successful (Bidwell, 2011; Klaff,
2004). An organization already has knowledge about the
Alignment, Capabilities, and Engagement profiles of internal
candidates. A positive ACE profile, coupled with the candidate’s
higher knowledge of the new unit than an outsider, should
increase the likelihood of success.
Acculturation is a critical stage in managing the talent lifecycle.
There is a risk of losing new hires or contractors physically or
mentally early in the game. While some employees may bolt
quickly when they sense there is not a good fit (Brkich, Jeffs, &
Carless, 2002; Kristof-Brown, Jansen, & Colbert, 2002) or that the
organizational environment was misrepresented during the
talent-acquisition process, others who feel this way are likely to
bide their time waiting for an exit strategy. This, of course, means
that the organization has people in place who really don’t want to
be there. Says Allan Weisberg, former Chief Learning Officer of
Johnson and Johnson, ‘‘Onboarding is too often more about
procedures than on how well a new hire is integrated into the
fabric of the organization.’’ Years of research of the Leader–
Member Exchange theory (Dansereau et al., 1973; Graen, 2013) tell
us that bonds are crafted early in a new relationship.
Many organizations focus on Alignment issues (e.g., polices,
procedures, goals) or Capabilities (e.g., training), but often miss the
early Engagement aspects that are so important to connecting with
leaders, peers, or subordinates. For example, dual feelings of
wanting to be part of a team, but also being recognized for one’s
individuality, are the dynamic often heard from employees in focus
groups or interviews. To engage these new hires, managers need to
create a welcoming environment, with clear, mutually agreedupon
expectations between the new hire and the manager and
peers. The supervisor can greatly influence Engagement by
matching the individual to issues that are important to him or
her—recognition, growth opportunities, safety and security, fair
treatment, or open communication.
Performance management, a frequently dreaded process by
many managers, often fails because of a basic conflict among the
elements of the model. Performance management is often thought
of as the process for creating Alignment—clear goals and measures
linked to team, department and organizational goals. That is
usually the easy part. The harder part is staying focused, managing
deviations, and enabling employees to develop skills to perform
better (Pulakos, Mueller-Hanson, O’Leary, & Meyrowitz, 2012;
Schiemann, 2009a). This is often where the wheels come off the
wagon. In an attempt to evaluate performance and correct
deviations, people leaders often compromise Engagement. Providing
feedback is both a skill and an art. When it is not done well,
employees may leave reviews with diminished Engagement. This
feeling could decrease their motivation to hone their skills or
increase their motivation to take their skills elsewhere. Additionally,
the link to Capabilities is also often sacrificed in the zeal to
create Alignment. Managers are often so focused on goals and gaps
that they do not provide sufficient time to coach their people. They
are quick to focus on alignment gaps, but not on development ones.
In a review of 150 departments from a Metrus Institute global
database, managers that provide constructive feedback have both
higher Capabilities and Engagement ratings from their employ-
ees.4
In a second study of 11 companies that included 5000
employees, Seibert reports that when employees strongly agreed
that their managers provided ongoing coaching and feedback to
help them succeed, 93% reported a willingness to put in additional
effort when needed, compared to only 33% of those who reported
poor coaching and feedback (Seibert, 2013).
For performance management to work, there needs to be some
benefit to the individual. Without a clear linkage to rewards—
whether it’s the baseline ‘‘you get to keep your job,’’ getting a large
bonus or great recognition—it can be difficult if not impossible to
motivate an employee to address gaps or make developmental
investments (McGinty & Hanke, 1989; Schiemann, 2009a).
Retention. The top 5–10% of talent is highly sought after, yet
retention of top performers in pivotal jobs5
(Boudreau & Ramstad,
2007; Cascio & Boudreau, 2011) is a significant challenge for many
organizations. It is often assumed that most departing employees
are leaving because of issues with their supervisors. However, in
many situations, other factors are at play. In a retail organization,
we found that training was the leading cause of turnover due to
feelings of insufficient capabilities to deal with customers, and the
related stress that this caused. In other situations, alignment
factors, such as performance-reward disconnects or mismatched
values, were the culprits. While some are under the control of the
immediate manager or coach, others are tied to policies, values,
resources or senior-leader behaviors. One senior leader of a
financial-services firm told me, ‘‘It’s hard to keep people here when
the president refuses to share our strategy and future vision.’’ This
is one of the reasons why it is important to measure both ACE and
the drivers of ACE. By doing so, it is possible to discover the linkage
4
Analysis conducted by J. Seibert from the Metrus Institute of scores of employee
surveys on both favorability of performance feedback and Capabilities and
Engagement scores. Managers who were rated in the top quartile on providing
good coaching and feedback had 16 percentage point higher Capabilities scores and
18 percentage point higher Engagement scores, compared to bottom quartile
managers.
5
Pivotal jobs are those jobs where improving the quantity or quality of the talent
has the greatest impact on organizational success.
W.A. Schiemann / Journal of World Business 49 (2014) 281–288284
between the drivers, ACE and important outcomes such as
turnover of high performers.
Talent recovery. The last stage of the talent lifecycle is recovery.
Effective organizations today, such as KPMG, Ernst and Young,
Microsoft, McKinsey, Agilent and Waste Management, Inc. are
tracking and hoping to recover lost talent in the future or to use
their relationships with former employees to attract new talent
(Tucker, 2011). If superstars who are highly aligned, capable, and
engaged separate from the organization early in their careers,
then perhaps they can be attracted back after experiencing life in
subsequent employment situations. Maybe the grass was not
greener after they departed. In a world of talent scarcity in pivotal
or difficult skill areas, organizations have much to gain by creating
cultures and processes that increase the probabilities that lost
talent may one day be recovered. The ACE framework can be
helpful in thinking about this. For example, one global technology
services company has focused on this in two ways: better
understanding why high ‘fit’ people leave and then building
strong social networks to enable it to keep in touch with members
of this alumni group who were prized candidates for rehire. The
company abandoned a heavy reliance on the exit interview,
instead engaging former employees in focus groups about six
months after they had left. The purpose of these sessions is
threefold. First, it is to learn why they left and what factors might
be controllable in order to reduce turnover among high
performers in the future. Often, one or more ACE drivers are
the primary cause. Second, executives in the company are
gathering useful intelligence regarding the factors making other
companies attractive places for hiring; conversely, they are also
learning what makes their organization distinctly attractive.
Finally, they are beginning to build a bridge for the future.
Departing employees may find the grass is not greener in the new
organization and return in the future, or they may refer great
potential talent to their former employer. In the example above,
the organization found that while its rewards Alignment—pay for
performance—was subpar, its investment in Capabilities was
almost always superior. This was something that it could leverage
in the future.
Leadership. People leaders—immediate managers or coaches—
are in a pivotal position to optimize people investments. And yet,
less than 20% of employees report high Alignment, Capabilities,
and Engagement within the units in which they work.6
According
to Jerry Seibert, who heads the Metrus Institute database that
tracks ACE scores across a large array of industries and countries,
‘‘many leaders manage units with ACE scores well below 50%
favorable. Such low scores have repeatedly led to sub-optimized
performance, lower customer loyalty, higher customer complaints,
and higher loss of top performers.’’ If a leader doesn’t have people
who are aligned with the goals and vision, have effective
competencies and are engaged in the tasks at hand, isn’t something
wrong? Is that leader the right person for a job that requires talent
optimization? Table 1 displays the eight distinct profiles that are
possible; only the first one is optimal. Each of the others has a
negative impact on the organization and the individual. For
example:
 In the profile labeled ‘‘strategic disconnect,’’ something has gone
awry in the connection to goals—perhaps the company direction
is cloudy or goals have not been set clearly; or it could be that
every unit is competing rather than cooperating to achieve
overall goals.
 In the ‘‘under-equipped’’ profile, skills, teamwork, information or
resources may be insufficient to meet customer expectations.
 In the ‘‘disengaged’’ profile, certain factors are holding the
employee back from giving 100%. It could be satisfaction drivers
such as unfair treatment, poor pay and benefits, or working
conditions that are holding engagement back, or it may be
commitment or advocacy drivers such as lack of recognition or
growth and development opportunities that are missing. In
either case, employees are not motivated to go beyond basic
performance.
We have discovered that ACE is a helpful framework for
coordinating the entire talent lifecycle (Schiemann, 2009b, 2012).
For many organizations, coordination and communication across
different stages of the talent lifecycle is a serious challenge. One
global telecommunications firm excelled in many stages of the
talent lifecycle: State-of-the-art recruiting strategies, well-validated
selection tools, technologically enabled on-boarding, topnotch
training, sophisticated performance management systems
and innovative retention strategies. There was only one problem:
they were not coordinated around a clear Talent Value Proposition
(TVP)7
(Schiemann, 2012). Values that integrated communications,
policies and behaviors across the talent lifecycle were absent. New
hires often said, ‘‘This is not the organization I thought it would be,’’
or ‘‘We talk innovation to our customers and new hires, but we
rarely invest much in it.’’ Current employees were often cynical
and jaded about the cultural promises in the recruiting literature.
People who left often reported a lack of trust because of many
inconsistent communications or communications that did not
mirror leader behaviors and investments. It is important to have
clear oversight of the entire talent lifecycle. Only then, can various
parts of the cycle be tweaked and adjusted to optimize the overall
process.
6. Measurement challenges
Measurement is highly fragmented in its usage, with too many
tactical and insufficient strategic metrics to enable the organization
to make key human capital decisions. Furthermore, most organizations
have few, if any, leading indicators of important business and
talent outcomes, such as loss of key performers, effective knowledge
transfer, customer defections, labor organizing, and ethical blowups.
The ACE People Equity framework—eminently measureable across
different global contexts—serves as a bridge between important
Table 1
ACE profiles.
6
These data from the global Metrus Institute represent employees who report
more than 80% favorable scores on all three dimensions of People Equity obtained
from scales on an employee survey.
7
A Talent Value Proposition is a mutually agreed upon set of expectations
between employer and employee, such as the level or type of work expected by the
organization and the reciprocal level of development expected by the employee.
W.A. Schiemann / Journal of World Business 49 (2014) 281–288 285
individual and business outcomes (turnover, financial performance,
quality,productivity,customerretention)and thepolicies,processes
and behaviors that influence ACE.
While Engagement has traditionally been measured with an
employee survey, the others two factors have not. After
experimenting with a number of approaches, we have discovered
that it was indeed possible—even desirable—to measure ACE using
a survey methodology with employees or other stakeholders, such
as suppliers who are providing talent to the organization
(Schiemann, 2009b). Borg, Groenen, Bilsky, Jehn, and Schwartz
(2010) have also validated this approach in a global sample. This
approach allows one to compare scores on common scales, so that
one can assess A relative to C relative to E.
For countries operating in multinational environments, this
framework and measurement approach can be a powerful way to
understand organizational differences that may reflect both the
capabilities and behaviors of leaders in those countries, as well as
the unique challenges of those countries that these managers face.
Fig. 2 is an example of a profile that summarizes the levels of
Alignment, Capabilities, and Engagement, in this case, across major
units for a global service organization. By using color coding or
shading to represent strong-to-weak ACE scores, patterns within
the organizational structure become clear immediately. For
example, the US Northeast is turning in some outstanding
Engagement and Capabilities scores compared to other regions
of the country. What are they doing differently? Can their approach
be adapted to other regions?
The Asia-Pacific region, as a whole, has People Equity scores
that are middling. The important information, however, lies in the
variance within the region. China brings in stellar ACE scores, while
Japan is struggling to optimize their talent. It must be stated that
these findings are not a universal pattern; we have found
organizations in which the patterns of China and Japan are
reversed. For this organization, there are likely to be learnings
about China’s management of Capabilities and Engagement that
can serve as good practices elsewhere.
In contrast to Asia, EMEA is a region that is challenged on
multiple fronts.8
While many countries in the region are scoring
poorly on talent optimization as indicated by their low ACE scores,
some interesting patterns emerge. For example, the U.K. has higher
Alignment scores; how are they achieving stronger Alignment
perceptions than other EMEA countries? Italy has a unique profile
with very strong Engagement scores and weak Alignment and
Capabilities scores. This should prompt leaders to investigate why
this pattern is occurring. This could be the profile of a new team
that is in the ‘unfocused enthusiasm’ stage of development or it
could be an insidious profile of a country silo in which there is
enormous loyalty to the country leader, but low alignment with
the overall organization. Furthermore, this leader may well have
starved his unit of the resources or skills they need to meet
customer requirements—a potential symptom of the low Capabilities
score.
The answers to these questions can be ascertained through
qualitative interviews or focus groups. However, if ACE is being
obtained through a survey instrument, as in the case of this
organization, there is also potential explanatory power from
additional items in the survey that measure Drivers of Alignment,
Fig. 2. ACE scorecard example.
8
These data represent one company and are not indicative of the general results
of these countries or regions.
W.A. Schiemann / Journal of World Business 49 (2014) 281–288286
Capabilities and Engagement. These are items that have explanatory
power of why A, C, or E are high or low (Schiemann, 2009b;
Schiemann et al., 2013). Furthermore, the Drivers of low A, C, or E
may be different for different regions or countries, but that is
readily discoverable through statistical analysis. Low Engagement
may be a result of poor growth opportunities in one country, but
driven by poor communication practices in another. This
information not only enables global leaders to understand
management practices better, but also to understand why talent
is being optimized or not in different regions. This information
then allows them to target resources to different solutions—
coaching, skills, performance management, rewards—that are
most appropriate for different regions, countries or departments.
Consider one final argument for the use of employee measurement
to report on Alignment and Capabilities in addition to
Engagement. The perceptions of employees (or other labor sources
and suppliers) are a great window into strategy execution. For
example, employees can provide interesting insights about
customers. Customer-contact employees often can serve as a
mirror of customer concerns and satisfaction when their ratings
are calibrated with those of customers. By measuring new hires as
they move through onboarding and acculturation, and comparing
their views with established employees, it is possible to gain key
insights into the employer brand and how well the organization
acculturates new members. Or, employees can provide insights
into innovation if that is a strategic priority—how ideas are (or are
not) generated, developed and implemented.
7. Managerial relevance
Human capital is an increasingly costly resource for most
organizations around the globe and one that is central to achieving
the mission and goals of the organization. This article focused on
how to optimize human capital investments by thinking about
how the organization manages the entire talent lifecycle—from
talent attraction to recycling of talent in the future, by maximizing
three critical drivers of overall company performance—Alignment,
Capabilities, and Engagement of people, and by having the right
measures in place to understand, focus, develop, and leverage
human capital resources. Here are a few key recommendations:
 Define talent broadly. Talent is the collective knowledge, skills,
abilities, experiences, values, habits and behaviors of all labor
that is brought to bear on achieving the organization’s mission.
Global organizations in particular face the challenge of capturing
the breadth of such talent in ways that allow them both to
understand and to manage it. Thinking about talent broadly will
allow managers to determine if they are making the right talent
investments and reaping the associated rewards.
 Think talent optimization rather than talent management. Think
about the full talent lifecycle that needs to be managed. This is a
particular challenge for organizations operating in different
countries or cultures because of the increased complexity and
the need to balance local versus system-wide objectives.
Recommend one leader or team that is responsible for overseeing
the entire talent lifecycle. By doing so, it is less likely that
managers will sub-optimize talent by maximizing each talent
stage or process. Country or functional silos that manage
different aspects of the talent lifecycle can kill overall effectiveness.
Make sure that these leaders have the authority to break
through silos that create incongruity across the talent lifecycle.
 Use a global talent-optimization framework, such as ACE, that
can serve as a surrogate for talent optimization, and help to
pinpoint where talent investments should be made (e.g., targeted
managerial skills or training) and processes, structure or policies
changed. Whatever framework is used, it should provide a bridge
between important organizational outcomes such as turnover,
customer loyalty and financial performance and investments in
human capital (e.g., performance management, hiring
approaches, leader development). Take steps to measure the
effectiveness of various stages of the talent lifecycle as well as its
overall impact.
 Eschew lots of tactical metrics that only serve to confuse
decisions. Use more strategic measures to prioritize where talent
investments should be accelerated or reduced.
 Looking through an ACE lens enables us to see many of the
potential disconnects or areas of misalignment in our talent
processes that span the talent lifecycle, resulting in sub-optimized
talent and organizational outcomes. Periodically conduct an audit
of the talent lifecycle, looking for interconnection gaps and
inconsistencies with an organization’s talent brand and strategy.9
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