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Fredric D. Frank, Craig R. Taylor, TalentKeepers
alent management practices have developed and adapted throughout the years in response to many changes in the workplace, from the industrial revolution and the rise of labor unions, to affirmative action, globalization, and outsourcing, to name just a few. The 1990s ended with a call-toarms to fight “the war for talent.” While the war for talent clearly has cooled in the early stages of the 21st century, dampened by economic doldrums and concerns with global security, the real battle to attract, develop, motivate, and retain talent is going to heat up considerably. A looming demographic time bomb will make talent management a top priority for organizations. This article covers a number of the trends that have shaped our current practices as well as those that will contribute to future strategies.
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Formal talent management practices have a needed to keep their organizations operating relatively short history but rapid rise as a profesefficiently and competitively. Talent management sion. The Human Resource Planning Society strategists must prepare for what is likely to be a (HRPS), now in its third decade of service to the roller coaster ride. human resource and broader business executive community, has been committed to improving organizational performance through the applicaRecruiting has undergone major changes. tion of strategic human resource management Historically, recruiting was driven by various practices, including talent management. HRPS communication channels, including classified ads, was preceded by the American Society for college placement offices, and internal job-postPersonnel Administration, founded in 1948, by 28 ing systems. But the biggest limitation of these individuals to provide professional development traditional tactics is that, by definition, they are for an emerging profession in transition. Today, bound to that channel’s geographic distribution, renamed the Society for Human Resource market, and circulation. Another limitation has Management (SHRM), that organization has been time—the time to write the ad, place it in over 175,000 members (SHRM, 2003). selected media, wait for inquiries, schedule interTalent as a driving force behind HR’s contriviews or other screening practices, and so on. As butions to organizational success is underscored pressure mounts to reduce job vacancy periods by a recent Human Resource Planning article and shorten time-to-productivity measures, time entitled “The 21st Century Human Resources has become the enemy. Technology Function.” Its bold subtitle, “It’s the has come to the rescue. The internet Talent, Stupid!,” further reinforces has offered a way to attack time, cost, the central role of talent in the evoluThe future emphaand reach simultaneously. tion of HR’s impact with organizations sis is likely to shift Web recruiting is exploding. In an they support (Buckingham & effort to find any possible advantage, Vosburgh, 2001). from purely individboth employers and job seekers are Regardless of an employer’s size ually oriented logging on in record numbers. or industry, during the last 50 years Monster.com, with 36 percent of the waves of change have swept over learning, toward worldwide web career market, is the organizations. Some of these making teams largest by far of the plethora of changes, such as affirmative action (often virtual and online career websites. In the third and related legislation in the United quarter of 2003, Monster had 16.7 States or privatization practices in sometimes global) million unique visitors who stayed China, have had a broad and sweepmore effective in an average of 15.6 minutes. By ing impact, forever affecting values, September 2003, there were 30.7 beliefs, and practices. Others, such as working with each million active resumes in the Monster the movement from traditional trainother to meet system, up from 19.6 million just a ing models to web-based e-learning, year earlier (Monster, 2003). are still in a formative phase and the common goals. No one would argue that Monster, full impact on talent management has Hot Jobs, Career Builder, and the yet to be seen. others are adding value on both sides of the In a slow or down economy, an intense talent employment equation by broadening the reach shortage may be difficult to visualize, yet what and accelerating the speed of linking jobs and we know about economic cycles and demographapplicants. And when you add to the mix other ic trends forces us to confront a not-too-distant online screening and analysis tools, including future that includes a labor/talent deficit in supresume analysis programs, and sophisticated ply/demand. online pre-employment assessments, the world One thing is for sure: Evolutionary, and in of recruiting has changed dramatically. some cases revolutionary, changes are already As all of these tools become more sophisticated, underway that will affect permanently how we recruiting in the future may become more deperapproach talent management. Workplaces everysonalized on the one hand, with large volumes of where are facing an increasingly complex and applicants being screened by algorithms rather ever-changing landscape in their efforts to than judgment, and more personal on the other, acquire, retain, motivate, and develop the talent
Recruiting for Talent
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through the wide use of web phones for immediate interviews and the greater use of synchronous video conferencing.
Training and Developing Talent
Learning and performance improvement have always been an integral part of talent management. Employee training has a long history of ensuring an organization has a skilled, motivated, and competent workforce. From orientation programs and technical training classes experienced early in one’s career, to leadership development and executive coaching, training and development is deeply woven into the fabric of talent management practices. During the last 20 years, workplace learning strategies continued to rely heavily on traditional, instructor-led, small-group programs in classroom settings. Even today, while estimates vary, classroom training still accounts for as much as 72 percent of all workplace learning in the United States, 77 percent in Europe, 80 percent in Asia, and 92 percent in Latin America (Sugrue, 2003). But this period also saw the emergence of technology-assisted learning, beginning with basic computer-based training initiatives to more advanced interactive video discs and CD-ROMS, to today’s widely used web-based e-learning tools delivered on everything from notebook computers to wireless PDAs. Workplace learning and performance received a boost in 1990 with the publication of Peter Senge’s The Fifth Discipline. Learning was being recast and positioned as a key strategic element in an organization’s success, and much more than a tactic aimed at improving job performance. Senge described a learning organization as one “where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together” (Senge, 1990). Achieving this vision proved difficult. With traditional models of structured, classroom learning still the norm, learning remained as much dependent on the skills of the facilitator as it did on the power and value of the content. Instructional designers and courseware developers worked hard to create new, interesting, and engaging methods to motivate and teach, but achieving the vision of a learning organization may depend more on the organization itself than
on learning strategies. “If we are to be effective, our views and theories of organization must change,” said Pat McLagan, CEO of McLagan International. The metamorphosis is from closed rational systems focused on structure to dynamic models inspired by new views of the universe that emphasize process and participation (Galagan, 2003). The future emphasis is likely to shift from purely individually oriented learning, toward making teams (often virtual and sometimes global) more effective in working with each other to meet common goals. As learning technology and learning infrastructure continue to grow more sophisticated, the learning organization may finally be in reach. While some barriers to the aggressive growth of e-learning remain (bandwidth issues, for example), technology’s impact on training will continue to deepen. ASTD’s annual State of the Industry Report shows significant growth in the application of learning technologies around the globe. In 2003, 15 percent of U.S. organizations employed technology-assisted learning, but that falls short of the global leader, Japan, which reported 20 percent (Sugrue, 2003). IDC, a global IT market and intelligence firm that tracks e-learning, forecasts the worldwide e-learning market will have grown from $6.6 billion in 2002 to $23.7 billion in 2006. The report’s authors believe web-based learning will “become the game-changer” in the future of learning (IDC, 2003). As we move into the 21st century, traditional models of workplace learning will change as dramatically as any part of the talent management equation. The dialogue in e-learning circles today is less about which dimension of the movement, such as the development of technical standards or the quality of content, will most fuel rapid adoption, but more about the synergy of these forces and how they will build greater momentum (Taylor, 2002). In a world where job performance is systematically monitored by a sophisticated learning management system, short, targeted performance-based lessons can be delivered in real time and exactly when needed in order to address specific tasks and skill weaknesses. Unlike in the past when learning largely took place in settings away from the actual job, workplace learning will become more and more integrated into the daily work flow. Learning technology will facilitate the combination of improved workplace performance metrics with compelling, interactive content ultimately to make working and learning a seamless experience.
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created by attitudinal and organizational prejudices barring women from top executive jobs Treating talent fairly in all respects is critical (International Labour Organization, 1998). Glass for motivating and retaining employees. Over the ceilings certainly are not limited to the United last 30 years in the United States, perhaps no other States. In Europe (Catalyst, 2002) and in Japan area in talent management has received as much (PBI Asian HR eNewsletter, 2003), the glass ceilattention and scrutiny as affirmative action. ing may be a bigger problem than in the United Looking back 50 years ago, such protections were States. Organizations like the International rarely afforded employees. For example, there was Labour Organization are pushing international no Americans with Disabilities Act (ADA) and the standards to prevent sex discrimination and term “glass ceiling” had not yet been coined. harassment (HRI, 2003). And in the aftermath of Affirmative action can be traced far back to September 11, discrimination complaints escalated the early days of U.S. history, specifically, to the around religious and national original discrimina14th and 15th Amendments to the Constitution, tion, particular against Muslims and people of the Enforcement Acts of 1870 and 1871, and the Arab descent. Civil Rights Acts of 1866 and 1875 (Jenkins, Legislation has been enacted with regard to 1999). A major milestone in the history of affirthe disabled and on the basis of age as well. For mative action was the passing of the Civil Rights example, the ADA, enacted in 1992, was a major Act of 1964. It made discrimination illegal in milestone in the protection of workers’ rights. But employment, public accommodations, and prolegislation in the United States has not been the grams financed by the federal government. Added complete answer. To a large extent, employees to this, in 1965, President Lyndon B. Johnson have been disappointed by the rulings of the U.S. issued Executive Order 11246, which authorized Supreme Court when it comes to the ADA. In the U.S. Department of Labor to take fact, claims filed with the Equal “affirmative” action to make sure that Employment Opportunity As the economy ethnic minorities were treated equally Commission (EEOC) under the ADA in terms of employment. The latter have dropped significantly between improves, there are order stimulated programs intended to the 1995 high and 2003 (EEOC, indications that resolve bias against ethnic minorities 2003). Disability discrimination has and women in such areas as hiring, triggered protection in other parts of employees will be job promotion, and education (Pollard the world which in turn has led to leaving in droves. & O’Hare, 1999). positive steps by employers. For Employment litigation is tending example, Japan’s mandated requireto increase worldwide, such as in Japan (Human ment for quotas on the employment of the disabled Resources International Report, 2001). Workers’ has led most companies represented in Japan to rights have been enhanced in Europe with the create programs specifically for the recruitment strengthening of already powerful labor unions and training of the disabled. From a worldwide as a result of within-country negotiations as well perspective, progress in employing the disabled as European Union representation. has, however, been disappointing (HRI, 2002). Race-based discrimination seems to be a Protection based upon age appears to be a global worldwide phenomenon (International Labour trend (Employment Discrimination Report, 2000; Organization Global Report, 2003). Of course, Cheung, 2000); as is the case with the disabled, issues revolving around fair treatment of employconsiderable discrimination continues to exist on ees are not restricted to racial considerations. Sex a global scale. discrimination and sexual harassment in the Some conflicting factors will make the future workplace have become more widely discussed somewhat difficult to predict in terms of protecconcerns around the world during the 1990s, parttion of employees. While courts will need to ly because the globalization of business and the reconcile national statutes, and many countries push of regional economic alliances, such as the will move in the direction of western-style European Union, have driven the need for comemployment protections, some countries, feeling mon standards (HRI, 2003). In the late 1980s the the pressure to attract more multinationals and term “glass ceiling” was coined in the United foreign investment, will likely ease up on their States to describe the invisible artificial barriers employment laws.
Treating Talent Fairly
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Other trends may be part of the future: 1. Laws relating to sex discrimination, and particularly sexual orientation, will be widespread. 2. Worldwide, laws will be enacted to provide equal treatment regardless of weight and height. 3. At least in the United States, virtually the only group not protected will be white male Caucasians under 40 years of age. 4. Given widespread labor shortages, solid managerial talent will be scarce, and will result in breaking through the glass ceiling. Additionally (because of labor shortages), race, gender, and age-based discrimination in the workplace will occur much less often. For practical reasons alone, we can be optimistic that organizations will continue to strive to treat talent fairly in the years to come. Regardless of whether this results from simple enlightened self-interest or some level of social conscience, as an end result organizations will want to be known as a place where talent is valued and grown.
Perhaps no talent management issue will have greater importance in the years to come than employee retention. Historically, employee retention has not been the issue it is today. In fact, U.S. median job tenure did not change much from the 1950s to the end of the 1990s (Yakoboski, 1999). While the last few years of a down economy might suggest that turnover has not been a problem, this has not been the case. From September 2002 through August 2003, a period best characterized as a downswing in the economy, annual turnover for the United States as a whole, across all jobs, was 19.2 percent (U. S. Department of Labor, Bureau of Labor Statistics, 2003). This is true globally as well; for example, Latin American employers had a difficult time retaining workers during the slow economy of 2002 (Watson Wyatt, 2002). Today, a confluence of forces makes the retention problem critically important. The two major forces are the down economy of the last few years and labor and talent shortages. A troublesome outcome of the downswing in the economy and the associated layoffs is that employee commitment and loyalty have been weakened. “It appears every man, woman and child is ready to quit their current job at the first opportunity”
(Sullivan, 2003). In terms of labor shortages, The Bureau of Labor Statistics projects a labor shortage of 10 million workers in 2008 (U.S. Department of Labor, Bureau of Labor Statistics, 2003). The National Association of Manufacturers, The Manufacturing Institute, and Deloitte & Touche, in their white paper, “Keeping America Competitive” (2003), project serious shortages in the manufacturing sector. As The New York Times reports in its October 12, 2003, issue, “conditions in the late 90’s may have been a reflection of job markets to come. And they are coming very quickly” (Brock, 2003). A major reason is that the big baby-boom generation is starting to retire. According to childstats.gov, in 1964 the percentage of children in the population under the age of 18 was 36 percent. By 1999, that number dropped to 26 percent of the population and will continue to fall until at least 2020. At the other end of the population curve, as boomers age, the share of the population aged 65 or older is projected to increase from 12 percent in 2000 to about 20 percent in 2030 (U.S. Census). “There simply aren’t enough workers behind the boomers in the labor supply pipeline to fill their jobs” (Brock, 2003). And it will be here soon, if not already. By 2005, the impact of the shortage will be in full swing (Kaihla, 2003). The impact will be felt globally as well. Labor shortages in every industrial country will hamper economic growth (Hewitt, 2002). On a global scale, “the major social crises of the twenty-first century will be the byproduct of labor shortages” (Hewitt, 2001). Germany, in particular, will feel the impact of labor shortages. “Unless Germany negotiates a new social contract, it will face an era of fiscal crisis amid widespread labor shortages and slower economic growth“(Jackson, 2003). The shortage of skilled workers will be even more pronounced. And globalization of the workforce is leading to a greater need to compete effectively against competitors in the battle for talent (Grantham, 2003; Patel, 2002). As the economy improves, there are indications that employees will be leaving in droves. A 2003 Society for Human Resource Management and Wall Street Journal Job Recovery Study indicates 83 percent of employees surveyed said it was likely they would actively seek new employment once the job market and economy improved. This is buttressed by the Conference Board survey (2003), which found that employee discontent is the highest since the survey began in 1995. Said
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front-line leader as the driver of retention has differently, “The minute the labor market been recognized. Pay, benefits, and other employrebounds, they’re gone – just at the time ee rewards entice employees to enter a company, we’re entering this period of labor shortage” but poor managers cause them to leave. The role (Kaihla, 2003). of the front-line leader in retention has emerged In summary, the demographic time bomb (SHRM Retention Survey, 2000: Buckingham & fueled by aging baby boomers is not a guess—it Coffman, 1999). This is underscored in the is an actuarial fact. Any kind of demographic proWorkTrends 2004 annual survey of over 10,000 jections with respect to people who have already employees. Results show eroding trends in job been born is notoriously accurate (Kaihla, 2003). security and intent to remain. This implies that Not that the economy and labor and talent as the job market improves and there are more shortages are the only factors producing a crisis. employment alternatives, leaders will need to Technology has been contributing as well. The put more effort into retaining talent (Gantz Wiley internet has enabled employees to become far Research, 2004). more knowledgeable and sophisticated about Such retention leadership talents as building employment and job searches (Hansen, 2001), trust with one’s team members are critical to thus making organizations more vulnerable to achieving high retention (Frank, 2003). Employees turnover. As internet usage increases, this will be will stay if they have a good relationship and open exacerbated. Technology advances also contribute communication with their immediate to the “off-shoring” of not only manboss (HRI Institute, 2001). For examufacturing, but of professional and ple, in a well-reported study, Sprint technical knowledge workers (e.g., Employees will stay PCS improved retention by working financial transactions, software develwith front-line leaders in customer opment, call center support), a trend if they have a good contact centers. Leaders were that will continue. relationship assessed on 10 retention leader talents What makes the issue of turnover and open commuand then experienced e-learning to so serious is that the costs of turnover enhance talent gaps. Attrition fell conare significant and far-reaching. Much nication with their sistently below that at control centers more than in the past, these costs are immediate boss. (Taylor, 2002). being quantified. For example: What does the future hold for 1. Turnover is estimated to cost the turnover and employee retention? U.S. economy $5 trillion annually (Journal of 1. Employee retention will be the number one Business Strategy, 2003). priority of HR executives. 2. Turnover results in reduced earnings and stock 2. Retention rates will assume a prominent posiprices, a documented decrease of an average tion in company annual reports. 38 percent (Sibson, 2000). 3. Leaders and top executives will be held 3. Not only does retention reduce turnover costs accountable for the retention of employees. and increase productivity, it is also correlated All managers will be rewarded for their with high customer loyalty and greater profretention rate accomplishments. itability (Dresang, 2002). 4. A substantial part of training budgets will be 4. More statistics are available pertaining to devoted to equipping leaders with the talent specific industries. For example, the annual to be effective retention leaders. cost of turnover in the supermarket industry 5. Leaders will be selected based upon retention exceeds the entire industry’s annual profit leader talents. by more than 40 percent (Frank, 2000). With 6. It will be widely recognized that all employees respect to productivity, manufacturing plants are retention agents; that team members can with annual turnover rates of less than 3 assist in the efforts to improve employee retenpercent achieved a median productivity per tion by helping each other with work-related employee of $200,000; for plants with turnover problems to stem the tide of turnover. rates of more than 20 percent, median produc7. Years with an organization will be rewarded tivity dropped to $120,000 (Jusko, 2000). as a separate business criterion (i.e., longevity What should we do to control turnover? will be explicitly rewarded), in balance with Clearly one thing we can do is have front-line performance contributions (i.e., it is not leaders who are retention experts. The role of the enough just to “show up”).
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8. Human metrics will be increasingly used to document the impact of turnover and retention imperatives. In summary, turnover will assume crisis proportions as human capital becomes a scarce natural resource. Organizations that face this problem head on will be able to reduce its impact but it will remain the number one human resources issue.
The Future for Talent Management
PeopleSoft was founded in 1987 and one year later launched the PeopleSoft Human Resources Management System, its first product. Ninety eight people attended their first client conference in 1990. By 1996 the number of attendees had swelled to 7,288. That was two years after Fortune magazine named PeopleSoft the “fastest growing software company in America.” In 2002 PeopleSoft released 35 new products (PeopleSoft, 2003). As just one indicator, it is safe to say technology is now a ubiquitous part of talent management practices for both employers and employees. In much the same way that small proprietorships gave way to the rise of major corporations following the industrial revolution, technology and the internet will usher in a new model for talent management. As General Motors, Dupont, Standard Oil, and others were becoming huge national enterprises, a new organizational approach to managing talent was required. Today, signs point to the influence of technology in much the same way. As organizations fully embrace technology and the web, models that define the relationship between employers and employees will evolve, and new ones will emerge (Davis & Meyer, 1998). Many models will reshape employment relationships with workers. While telecommuting experienced a setback following the dot.com collapse in 2000, it is on the rebound. An estimated 24 million Americans regularly or occasionally telecommute, and 45 percent of the U.S. workforce already uses mobile devices ranging from portable PCs and PDAs to wireless internet tools (Gartner, 2003). A 2002 benefits survey by SHRM found that 37 percent of employers offered telecommuting on a part-time basis, with 23 percent offering it as a full-time option (SHRM, 2002). Teamwork and team building, a cornerstone of talent management, was long considered to be a
function of people working together in small groups. Australian-born George Elton Mayo’s now-famous Hawthorne Studies in the late 1920s gave rise to the idea that teams, and the social interactions among team members, play an important role in the workplace (Burke, 2002). Today, with advanced communication tools, virtual work teams enable organizations to blend capabilities, shorten product cycles, boost productivity, and speed products to market. Software development teams, for example, often “chase the sun,” where digitally-connected programming teams pass work from center to center around the globe to achieve 24/7 development cycles (Joinson, 2002). Walt Disney Company’s animation team used this technique in creating the animated feature, Hunchback of Notre Dame. Drawings would start in Paris, with artists at Notre Dame and Disneyland Paris, and then move to Florida then on to California to continue the creative process. As technology infiltrates nearly every facet of the workplace, implications for talent management may be profound. According to the U.S. Department of Labor’s Employment and Training Administration, 80 percent of the new jobs created since 1992 require some degree of post-secondary training or education, driven largely by technology and the tremendous growth in knowledge workers who now account for a third of the U.S. workforce (DeRocco, 2003). Workers in traditional blue-collar industries now more than ever need specialized training to operate advanced robotics and computerized production lines. Rental car clerks and delivery drivers all carry highly advanced hand-held wireless devices. It’s a new world of work. Is there a dark side to the future? GPS (global positioning system) technology, for example, is finding its way into new applications at an astonishing rate. Using GPS technology, company vehicles or rental cars, cell phones, PDAs, notebooks computers, can all be continuously tracked. An HR Forensics expert examining emails and web behavior can learn a lot about someone. For the most part, in this era of hyper security, that’s a good thing. But some employees may feel as though “Big Brother” is looming ever larger with the continued erosion of privacy in the workplace. HR and talent management leaders and strategists have no choice but to keep pace. “The twenty-first century will be about velocity: the speed of business and the speed of change. To keep up with and anticipate change, businesses need
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radically better information flow.” To get a better flow of information to develop the right processes and strategies, they need what Bill Gates calls a “digital nervous system” (Gates, 1999). For example, one challenge for the HR function is to get better at matching individual employee skills and competencies (skill inventories) with project assignment requirements (work) and tracking outcomes and effectiveness. Ideally, all human resource information systems would be part of the enterprise-wide digital nervous system, enabling the seamless flow of information to the right person at the right time. To achieve this widely held vision, technological and human barriers need to be overcome. As technology continues to transform talent management practices, the approach human resource organizations adopt to create a connected infrastructure may be largely dependent on how well they guide their overall organization in its reaction to technological change. Great companies respond to technological change with thoughtfulness and creativity, driven by a compulsion to turn unrealized potential into results; mediocre companies react and lurch about, motivated by a fear of being left behind (Collins, 2001). In 1999, what began as a dialogue among web strategists ultimately surfaced as “The Cluetrain Manifesto,” a book described as a populist view of the power of connectedness (Locke, et al., 1999). In some ways, it was a wake-up call for organizations: Without anyone asking for it, the Web has given the people inside an organization easy access to one another in a rich variety of ways. They can send e-mail to one person, to a steady group, to a dynamic team, to the entire sales force, or “just” to the board of directors. They can post creative, informative pages that express their interests, correct the mistakes in the official technical documentation, or point to the industry analyst’s report the company doesn’t want anyone to read. Now, in 2004, we better understand the implications of this. The future of talent management may well be about embracing and leveraging connectedness. Peering over the horizon, the demographically driven labor shortage looms as a dark cloud. In the next battle for talent there will be winners and there will be losers. Attracting, motivating, and retaining talent will take all of the energy and creativity we can muster.
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Fredric D. Frank, PhD, is chief executive officer of TalentKeepers, the award-winning employee retention firm. Fred has had over 30 years of experience in the human resources industry consulting with a large number of private and public sector organizations in the area of talent management. Fred is on the Human Resource Planning Society’s (HRPS) editorial review board for its Human Resource Planning journal, and the associate articles editor responsible for the talent management knowledge area. In addition to TalentKeepers, he has founded two other companies in the human resources area, both of which were acquired. Subsequent to the acquisition of his second company by the Thomson Company, Fred was head of acquisitions for a division of Thomson. Fred has a BA from Michigan State University, and MS and PhD degrees in industrial organizational psychology from Wayne State University. He formerly was a professor at Bowling Green State University and The University of Central Florida. He is on the board of directors for Michigan State University’s College of Arts and Letters. Craig R. Taylor is senior vice president of marketing for TalentKeepers employee retention firm, where he supports TalentKeepers’ growth strategies and global employee retention research. Prior to joining TalentKeepers he was chief marketing officer for AchieveGlobal and vice president of marketing for Click2Learn. Craig spent many years at Walt Disney Company leading the Disney University/Disney Institute’s rapid growth in offering business seminars to companies from around the world. He previously worked at Wilson Learning Corporation as vice president of assessment services and vice president of consulting services and at American Express Company in management development. Craig chairs the editorial advisory board and the E-Learning Brain Trust for T+D, ASTD’s monthly magazine, and is a contributing editor and regular columnist for the publication. He received a BA in psychology, and MEd and EdS degrees in counselor education, all from the University of Florida.
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HUMAN RESOURCE PLANNING
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