Today, Dr. Sullivan shared some frightening statistics about the efficacy of the talent management industry on ERE. To put it simply: it appears that the talent management industry is a catastrophic failure.

• 70% dissatisfied — 70% of the external customers (applicants) and 28% of the internal customers (hiring managers) indicate they are dissatisfied with the hiring process (Source: Staffing.org).
• 50% customer regret — 50% of the processes users (both managers and new hires) later regret their “buying” decision (Source: The Recruiting Roundtable). In addition, 25% of new hires later regret taking their new job within one year (Source: Challenger, Gray)
• 46% turnover — 46% of new hires leave their jobs within the first year(Source: eBullpen, LLC) and 50% of current employees are actively seeking or are planning to seek a new job (Source: Deloitte).
• 46% failure rate — 46% of U.S. new hires must be classified as failures within their first 18 months (fired, pressured to quit, required disciplinary action, etc.) (Source: Leadership IQ). In addition, 58% of the highest-priority hires, new executives hired from the outside, fail in their new position within 18 months (Source: Michael Watkins).
• Only a 19% success rate — only one out of five of the process output can be classified as unequivocal successes (Source: Leadership IQ).

• 66% regret hiring decisions — Nearly two-thirds of hiring managers come to regret their interview-based hiring decisions (Source: DDI)

With my hedge fund background, if these statistics represented a publicly traded entity, I’d short the be-jesus out of it. As it stands today, it’s fair to say that the time has come to rethink most talent management processes.

How? What’s the new model? First a bit of background…

My first job was at Goldman Sachs. They are arguably one of the best in the industry in terms of hiring processes. And still their way of doing things is flawed. The hiring process at Goldman goes like this: 1 “super day” of interviews, 10 different people interview you for an hour each = 10 hours of interviews. After that, the employees collectively come together and make a hiring decision that costs the firm $500k over 3 years [that's training, resources, benefits, salary and more]. To me, that process is not the best approach to learn if a candidate is worthy of a job offer.

What if it were like this?

Goldman turns its fast-track employees into mentors. They get matched with a student interested in their line of work and establish relationships with him / her over the course of 6 months or more. Not only will they build a great relationship, but the student will gain industry insight [beneficial to the student] and the company will become really smart about who they are hiring [beneficial to the company].

This new model requires employees to become the primary talent filter [with HR managing the process].

What value does this add to the company?

1. Cheaper sourcing of candidates [employees mentor during off hours]
2. Better employee engagement / knowledge transfer [students, if hired, could immediately "hit the ground running"]
3. Less frequent hiring mistakes [mis-hiring is costly]

This is TAG’s approach. My friend Ted at Groupereye also has a unique approach. Are there other companies that are trying to solve the talent management conundrum? Let me know!