Early identification of potential and performance. Even if this does not occur at graduate entry levels, early identification of both potential and performance form part of most talent management strategies. A popular and commonly used tool to achieve this is the “nine-box grid” (see Figure 1.1), often used in a group setting, which provides multiple perspectives of employees’ skills and potential.
Targeted and tailored support, development and career planning. Once “talented” individuals have been identified, they receive targeted and tailored support development and career planning. This may include study opportunities on sponsored MBA or other postgraduate programmes, senior management development programmes (delivered either internally or at prestigious business schools) and systematic cross-disciplinary and cross-geography job rotation to make sure that individuals have management experience in key functions connected to the business strategy. In recent years, particularly in the case of women and ethnic minorities, personalised career management has been supported by coaching, mentoring and the use of “sponsors” (senior managers who champion an individual for promotion).
Long-term succession planning linked to talent “pipelines”. Roles filled through this talent “pool” are planned sometimes decades in advance through a complex system of succession planning and talent “pipelines”. The progress of individuals towards their allotted roles is reviewed regularly (often on a quarterly or twice-yearly basis) by talent review committees made up of a combination of specialist HR managers, line managers and members of the senior management team. Often the organisation’s chief executive or other board members chair these committees. This ensures that the roles under scrutiny are linked closely to the requirements of the business strategy and the wishes of stakeholders and shareholders (institutional shareholders are now looking closely at organisations’ succession-planning processes when making investment decisions).
Exposure to senior management. Often with the backing of the chief executive, prospective candidates for senior roles in the talent pipeline are systematically exposed to the organisation’s existing senior management through formal and informal briefings, workshops and discussion groups. Ensuring that this occurs has become an important role for the chief executive (see Indra Nooyi’s comments in chapter 2).
A 2011 CIPD report provides a snapshot of talent management approaches in UK-based businesses:
Talent management activities are most commonly focused on two groups – high-potential employees (77% of responding firms said this) and senior managers (64% of responding firms).
Small and medium-sized firms (SMEs) use talent management more than do larger organisations (more than 250 employees) both to attract key staff (41% of SMEs compared with 20% of larger firms) and to retain them (50% of SMEs compared with 35% of larger firms).
Some 77% of very large firms (more than 5,000 employees) have talent management programmes, and some 66% of them focus their efforts on senior managers.
Talent is a relative concept
By and large, companies formulate their own definitions of talent and potential. It is safe to say that talented people are highly intelligent and gifted, with a particular blend of skills, knowledge and personal attributes. However, most organisations define talent in the context of their business or industry. Individuals are given the label of talented because they have attributes that are of great value to the business and hard to develop or replicate in others.
The firms featured in the case studies in this book have their own definitions of talent, but the common focus is on individuals who either make, or have the potential to make, a disproportionately strong impact on their part of the business. In other words, their knowledge and skill make such a difference that their organisations can ill-afford to lose them.
In some of the case studies, a star employee is someone with rare specialist skills. These skills are in great demand in the labour market and rival companies may be trying to poach these individuals. However, the majority of the case studies focus on leadership ability, and the firms featured arrived at a definition of talent by identifying key roles in the organisation that needed to be filled by the most capable individuals in the immediate or medium-term future (that is, succession planning).
Organisations have different talent requirements, which mirror the size and complexity of the business. These definitions or “talent profiles” effectively segment talent and form the basis of different talent pools. These could include, for example:
technical specialists, especially in areas key to the organisation’s core capabilities;
individuals with hard-to-recruit skills;
bright individuals from underrepresented groups whom the organisation wishes to advance into more senior positions;
the best-performing graduates or school leavers;
managers with the potential to move into senior management positions at the local, national or international level.
Regardless of the mix of specialist and management/leadership skills, talent is usually defined in terms of exceptional performance or high potential. The weighting of these two attributes is decided by senior managers in line with the organisation’s immediate and long-term priorities. There is often an implicit judgment about selecting individuals whose behaviour and values fit with those of the organisation.
How performance and potential are measured is for senior managers to decide. In many cases, the definition of exceptional performance is laid out in competency frameworks and appraisal systems. Defining high potential can be more difficult and might include a range of assessment tools such as development centres, psychometric testing and, inevitably, the personal judgment of those whose insights into talent are widely respected.
Organisations often use a nine-box grid to map individuals in terms of potential and performance (see Figure 1.1). Existing performance-management processes will be relied upon to keep monitoring and improving the performance of weak or solid performers. Technical specialists are often grouped in the bottom right box and the organisation, while valuing them highly, may not feel they need any extra opportunities to fulfil their potential. A talent management programme will generally focus on individuals in the top right box.
FIG 1.1 Nine-box grid of performance and potential
Some organisations opt for the simple solution of automatically placing a percentage of its top performers, identified through existing appraisal processes, into a talent pool. At Network Rail, for example, the talent pool was created for individuals who had reached the two uppermost bands for senior managers. However, the company has other selection criteria. Managers must be capable of moving up an additional band (into the highest senior management band or the director-level band) and be capable of moving across Network Rail as well as upwards. Approximately 100 managers constitute the talent pool at any one time.
Other organisations favour informal approaches to defining talent and identifying high-flyers. In an international manufacturing company, there is an informal network of senior HR managers who keep an eye on promising employees. Known as “TalentWatch”, the network both identifies talented individuals and promotes their advancement by ensuring they are allocated to temporary “special projects”, which will stretch them and enhance their personal reputation.
Well-established – but not well done
After a decade of experimentation, many companies still struggle with their talent strategies and are by no means confident that their approaches will guarantee enough leaders and specialists of the right calibre for their current and future needs.
A global survey by the Boston Consultancy Group (BCG) in 2010 suggests that many companies do not have a clear strategy for finding and keeping the best people. Covering 5,561 business leaders from 109 countries, the survey revealed that:
some 60% of respondents said they lacked a well-defined strategy to source talent or to address their succession challenges;
more than 33% ranked their company as having no strategy at al
l, and only 2% cited a strong, comprehensive strategy;
on average, respondents said their chief executives and other senior managers spent less than nine days a year on activities related to talent management;
talent management activities were narrowly focused, mainly on high-potential employees, with promising junior employees receiving least attention;
only 1% of respondents said talent plans were aligned with the company’s business-planning cycle.
BCG concluded that too many companies are “relying on serendipity to meet their current and future talent needs, incurring unnecessary business risk”.
Even human resources managers doubt their own track record in talent management. A 2012 McKinsey study describes HR staff as nearly “paralysed” by the scale of challenges facing them, with many feeling they are failing to keep pace with an unpredictable business environment. They identified talent management as a particularly daunting area. Only 32% had “high confidence” in their talent strategy or actions.
Emily Lawson, head of McKinsey’s global human capital practice, says the uncertainties of the current business environment are making it genuinely difficult for firms to assess the effectiveness of their strategies. She comments:
I can count on the fingers of two hands the robust talent strategies that I have actually seen – where the numbers have been done robustly and are modelled three to five years out where it is clearly understood what it is going to take to compete in a particular market. I think it is very hard.
Talent strategies take a long time to play out. There is still a misalignment between what goes on inside companies and what would strategically benefit them in terms of talent. Also in the wake of the 2008 downturn, companies stopped undertaking a lot of the discretionary activities in areas like career planning and mentoring that play such an important part in the process.
Can talent still be “managed”?
For all this focused investment of time, effort and financial resources, the question remains: can the current model of talent management help companies compete in an intensely competitive and global market for talent?
The research for this book suggests that there are a number of assumptions underpinning the current model that may no longer be relevant, including:
management and leadership potential can be spotted early;
this definition of potential will still be relevant in five or even ten years’ time;
getting to the top young is good for the organisation;
if you get senior management right, it will help the business;
career moves can be planned and achieved;
the concept of systematic development is sound and should be managed by the company;
the individuals under the spotlight are willing pawns in the game.
The last point is the most important one.
Spotting potential
Taking hard and fast judgments about potential is difficult enough in stable times, but in an unpredictable environment they become risky. As outlined above, the fast pace of change in some industries is making it difficult for firms to anticipate the skills they will need to compete successfully. This is a blind spot for many firms, often because the definition of what constitutes talent is heavily influenced by the existing senior management team. This increases the danger of firms producing an over-homogeneous pool of successors at a time when many experts and simple common sense stress the need for diversity – a theme that is explored in more depth in chapter 4.
Chris Benko, vice-president of global talent management at Merck, an American pharmaceutical company, comments:
Transforming the company and the way we think about talent is very challenging … Most of the formative experiences of our senior leaders were in the late 1990s and the early part of this century – which was a heyday for the pharmaceutical industry.
Now we need to move leaders pass their comfort zones to think about what it is going to take to develop in a way that is contrary to what led to their success and the success of our company.
Some organisations have no time for high-potential development schemes. Liane Hornsey, vice-president of people operations at Google, a multinational corporation specialising in internet-related services and products, says that she “detests” such schemes. Google, by contrast, offers all its employees the opportunity to put themselves forward for promotion based on their track record and performance:
We never hire because we have to get a task done. Every single hire that we make, be that in the most junior of roles, be that in the most junior customer service position for example, we will hire someone who we think has the potential to be a very senior leader.
In firms that adopt this approach, a strong culture that motivates bright employees to put themselves forward for advancement and development plays a far more important role than the detailed systems and processes for talent selection and development. Responsibility for career management and development is shared more effectively between the individual and the organisation. Getting the culture right is crucial, as Hornsey stresses:
Over I don’t know how many years, I have learned one thing. And that one thing is that if you don’t have a fertile soil in which you plant seeds, it doesn’t matter how intellectually robust and how brilliant your processes and your programmes are, they will fail. But if you have a robust soil, and a brilliant culture, the processes and the programmes can be pretty weak but they will work – because having the right culture is absolutely the bedrock to making sure you develop talent.
Talent-based culture is covered in more detail in chapter 5.
Keeping pace with business needs
Traditional talent management has generally focused on an integrated set of activities to make sure that there is a reliable supply of seasoned managers who will form the next generation of senior managers and leaders. Much of the focus of HR staff has been on activities and programmes which, although important, have arguably taken on a life of their own. This is covered in more detail in Chapter 3.
Becky Snow, global talent director at Mars, points out that talent management schemes are like huge tankers that are slow to manoeuvre if the organisation decides (or is forced) to move in different directions at short notice – an increasing likelihood in an uncertain and volatile world (see Chapter 3). Steering this tanker has prevented talent heads from playing a sufficiently strategic role in the business. If companies are to compete for talent effectively, they need to pay much more attention to achieving a tighter alignment between the needs of a business and the product of its talent management strategies. This is explored in more depth in Chapter 2.
Too much focus on the top
Most talent strategies focus heavily on getting a small number of people to the top of the organisation – often at the expense of everyone else. Yet there is less and less of a guarantee that the genuinely talented people the company seeks for its senior roles are willing or eager to invest their lives and their careers in reaching this goal.
Conventional talent management schemes rarely accommodate:
mavericks and outsiders who are creative and innovative in their thinking but do not perform well using traditional appraisal measures;
those with entrepreneurial aspirations who are frustrated by the lack of opportunity to engage in business start-up activities or (more cynically) use a corporate career as a stepping stone to launch their own enterprise (in both cases the organisation loses precious skills that it badly needs);
late starters or those recruited later in their careers who are normally too old to be on the high-flyer track even though they might vary the pool of talent at the organisation’s disposal;
those in peripheral careers within the company (technology, research, data processing) or those who want to make sideways moves for personal reasons or because they prefer the line of work;
those who are not sufficiently motivated by the prize on offer to pay the price they have to pay to climb the corporate ladder.
Chapters 4 and 6 explore how talent strategies need to be broadened to appeal to the needs and wants of these largely untapped groups of employees.
Conclusion: willing pawns?
Traditional talent management assumes that high-flying employees want to get to the top of the pile and will do whatever their firms require to get there. However, a new generation of talented workers may not be willing or motivated to stay with one employer for long, whatever the financial rewards and career opportunities on offer.
This makes long-term career planning much more difficult for organisations. Chapter 6 looks at how firms can retain the skills and creativity of former workers through associate and consultancy positions or by creating internal structures that enable intrapreneurs – those with entrepreneurial skills and aspirations who are willing to work inside organisations – to engage in business start-up activity and ideas incubators. These new relationships and work arrangements will help organisations anticipate and respond quickly to changes in the marketplace.
The following chapters look at how firms are changing their talent strategies in a volatile business environment where gifted employees have the ability to pursue opportunities virtually anywhere in the world.
2 Devising and implementing a talent strategy
Our talent management plan is designed annually by business heads and our HR people. But it is the business heads that drive the talent agenda and keep it alive and customised to each business unit. They hold a quarterly review to assess the progress of the plan and whether it is furthering their strategic goals.
Joydeep Bose, president and global head of human resources, Olam International
IN MATURE AND EMERGING MARKETS alike, the ability to implement strategy depends on having staff with the right experience and knowledge positioned in the right places across the business at the right time.
Managing Talent Page 3