Even at a time of economic uncertainty, talent continues to be a corporate pre-occupation. Chief executives want to be sure they have the best people to lead them through the downturn to eventual recovery. But there is plenty of evidence that talent management is simply not hitting the spot.
Every major survey tells the same story: companies may recognise the business imperative behind talent management, yet few see the returns they want. Dig a little deeper, and you see why.
Despite the lip service given to the talent imperative, corporate practice looks way off the mark. Two key findings in a new report, Creating the Talent-Driven Business, show why most companies’ talent management activities disappoint.
First, more than two-thirds of companies do not have a talent strategy. This is a major obstacle. Until a company has assessed the talent implications of its business plans, it will be operating in the dark. In many cases, the default strategy is to take care of senior management succession. While meeting this goal is certainly important, it is not an answer to the big questions.
In a changing marketplace, where innovation is at a premium, or in a sector where technological evolution throws up new opportunities and threats, or where competition and shifting customer expectations put huge pressure on customer-facing staff, there will be many key positions where exceptional capabilities and performance determine business outcomes. The only meaningful talent strategy is one that identifies those priority roles critical to executing business strategy. Anything less is worthless.
The second key finding is that fewer than one in five firms have an integrated talent management system. The research shows that sound processes are essential for talent management, but they need to be connected, consistent and have a clear line of sight to business strategy. Is it worth it? The clinching argument is that the minority who have stayed the course report superior business results compared with those less rigorous in their approach. It is, though, a tough call.
For one thing, companies start from a point where most talent processes are siloed: recruitment, development, assessment, performance management and other activities are invariably managed discretely. Yet the importance of being able to track an individual through the employment lifecycle is essential to managing talent effectively.
While getting the mechanics of talent management right must be a priority, there is much more to think about. Processes are not sufficient on their own – they need an organisational environment that supports and encourages effective people development and deployment. Increasingly, companies are questioning where talent management begins and ends. So joined-up reward, corporate culture and great-place-to-work programmes become equally important.
Responsibility for talent management is another important point to clarify. The answer is that it has to be a collaborative responsibility, although the ultimate owners must be operational managers because they are answerable for performance. Senior managers need to be actively involved in specifying the competencies and capabilities needed for key roles, as well as assessing performance, supporting talent development and creating the operational environment that enables talent to flourish.
HR and talent specialists must ensure that the optimum processes and practices are in place. They invariably have a leading part to play in facilitating steering groups involved in defining the talent agenda and identifying the ways in which competencies can be reliably assessed and developed. Further down the line, they need to be part of the regular talent review process.
The report argues that to succeed with talent management, both HR and line managers need to answer seven core questions:
- What are the talent implications of business strategy?
- What leadership, core business capabilities and skills must we develop?
- Who should be responsible for setting talent strategy and objectives?
- Who should be responsible for implementing talent management?
- How effective are talent management processes and practices?
- How do we know that talent is making a measurable difference?
- What corporate culture do we need to create for talent management to flourish?
More than ever before, making the most of talent is a source of competitive advantage. The question is whether companies are prepared to knuckle down to the hard grind of realising its potential.
David Harvey, managing director, Business Intelligence
- Creating the Talent-Driven Business is published by Business Intelligence in association with the Corporate Research Forum.