The People Bulletin

Is your organisation fit for the 21st century? Once, the secret of success was to keep getting bigger. Size brought valuable economies of scale. It justified ever more mergers and acquisitions, most of which, though, failed to deliver the promised business benefits. Numerous forces are reshaping the economic playing field. They include a heady brew of globalised markets, skills shortages, demographic trends, corporate governance, business strategy, increased competition, digital technology and expectations about the role of organisations in society.

The name of the game is no longer ‘size matters’. Instead, it is becoming ‘How can we become talent-driven?’ Talent is taking centre stage in organisations because it is the only reliable way to survive a constantly turbulent and unpredictable environment. Consequently, the shape of the 21st-century successful organisation is already in view. Talent is central to its core purpose whether through horizontal networking, the need for continuous improvement, the demand for high performance teams or the need to scale learning.

20th-century firm

Vertically integrated
Top-down leadership
Build the ultimate product
Gain efficiency
Hoard information/build IP
Experts
Lone hero
Security
Push

21st-century firm

Horizontally networked
Distributed responsibility
Continuous improvement
Scale learning
Share information
Learning new skills
High-performance teams
Transparency
Pull

Source: Reproduced with permission from ‘Leveraging the Talent-Driven Organization’ (2010) Richard Adler (rapporteur), The Aspen Institute.

What are the make or break decisions?

Being a manager implies continuous interventions that draw the best from staff, inspiring them to go the extra mile, and finding the next generation of leaders from the biggest possible gene pool. Today, every manager is now a talent manager. Faced with the challenges of complexity, uncertainty and ever-increasing competition, business leaders have begun to appreciate that talent management offers real help in generating profit and turning around situations where there is potential for serious failure.

Each organisation will have its own definition of talent and will identify a set of procedures that ensure it attracts, retains, motivates and develops the talented people it needs now and in the future. Here are some of the make or break decisions.

What definition of talent will you use?

Defining what you mean by talent can help you form a talent management strategy that meets the needs of your organisation. A definition we have found helpful is:

Talent consists of those individuals who can make a difference to organizational performance, either through their immediate contribution or in the longer term by demonstrating the highest levels of potential.[1]

As a manager of talent you need to link talent management processes with business goals. These processes include: 

• sourcing critical skills to meet short- and long-term business goals
• building a high-performance workplace
• strengthening the organisation’s performance and its ability to compete
• providing a framework for recruiting and developing talent
• encouraging a learning organisation that constantly adapts
• enhancing the organisation’s brand by becoming an employer of choice. 

Almost certainly you will need to prioritise. Choose what is most urgent within your organisation. Defining talent management will help you prioritise the actions you need to take. 

For example, Zurich HR Director Chris McCormack explains that the company has finessed its strategy ‘to take account of the present economic context. Rather than reducing our focus on our high talent population, we have sought to make efficiencies in our talent management spend. We continue to make sure our talent management strategy is strongly linked to business objectives.’ 

Decide what your organisation’s talent needs are – now and in the future 

In large organisations this inevitably proves to be a complex, long drawn out process in which succession planning, talent pools and the likely availability of suitable recruits may all need to be considered. What matters at this stage, though, is the decision to systematically assess talent requirements, in terms of both demand and supply. 

Part of this decision will be an analysis of exactly who the organisation wants to retain, who the high potentials are and who will need to be developed. While you may already do this informally, the point of a talent management system is to adopt a more systematic way of obtaining this information, using methods that are fully transparent. Nailing down who has the potential to progress and then establishing programmes that ensure their development can be time consuming. There are numerous support tools available, ranging from specialist talent management software to solutions like the McKinsey nine box grid than can help make the process more rational. 

Recruit only the best 

Yet another key decision is the choice about the quality of those you recruit. Where specific types of talent are scarce, you may need to pay close attention to the basis of recruitment. For example, do you recruit only the best, or people who are ‘fit for purpose’, i.e. those that are ‘good enough’? You cannot afford to leave this kind of decision solely to the HR professionals; they need clear guidance on what the organisation should be looking for and why. 

Who should we develop?

Who should the organisation be developing? Is it everyone employed or instead a chosen few, the most talented or those with the greatest potential to excel or become tomorrow’s leaders? These are heady choices and have implications far beyond the initial decision. 

A common corporate view is to prioritise succession planning. Boards do this because it seems easier and more economic to focus on a few individuals. The results are also easier to measure, both in terms of the value a person can bring to the brand and the damage that a lack of future leaders can inflict. 

Developing the next generation is a legitimate choice but it demands a proactive effort, usually supported by HR professionals. It may include assessment centres, psychometric testing, devising fast-track stretch tasks for talented individuals and then tracking their progress. It is a labour-intensive activity but it is relatively easy to establish a measurable return on investment. 

Seek opportunities to develop talent 

One of the key functions of any leader is to help people develop their unique talents. It is also the core of talent management. 

Global organisations usually seek opportunities to move key employees around the business. For example, the decision by BP to send Richard Dudley to manage its operations in Russia gave him ideal experience to expand his diplomatic skills. Later they proved much needed, when he replaced the company’s existing CEO, the reputation-damaged Tony Hayward. 

Moving people around to develop their talent takes active decision making, it does not just happen naturally. Those suitable for this kind of experience have to be identified, the specific learning required must be determined and the opportunity for placement must be found in an organised way. When such opportunities are found they can help foster a unified culture and uncover skills that can help the organisation. One HR director of a FTSE 100 company which had reorganised and merged various business units in response to the recession explained that this gave senior management more responsibility for setting business objectives: ‘This was our largest organisational restructure. If you can’t find a development opportunity around that, then something’s wrong!’ 

Encourage openness and transparency 

Talent management systems work best when their procedures and target audience are public knowledge within the organisation and even beyond it. Employees need to understand where they fit in in terms of the organisation’s development efforts and to see how they can become part of it. 

One of the advantages of deciding to make the whole process open and transparent is that it provides a common language for talking about development, talent and making decisions about investing in people. Succession planning, for example, can be on a more systematic basis and individual careers can be mapped out more clearly. One HR director told us: ‘We don’t go into specifics of succession planning but we need to establish a shared view of what talent is. What are the opportunities and how we can work together to develop that.’ 

Use line managers as talent ambassadors

If you decide to use line managers as talent ambassadors you will taking an important step in enrolling a key stakeholder group in the talent management process. Even if your organisation has an HR team, it cannot micro handle all the complex issues around exploiting talent. In many situations talent management devolves either formally or informally to line managers. 

Line managers must take on the talent management task because they are closest to where the talent is and can see firsthand the contribution it makes to performance, and where day-to-day decisions that affect talent are actually made. Zurich, for example, has created what it describes as a ‘talent management culture’ in which all line managers receive training as talent managers. 

When is my intervention needed? 

There will be numerous times when you might intervene to promote talent management. So what are the main touch points that are most likely to need your attention? Intervention helps you develop a talent culture within your organisation. But intervention must be timely and linked to outcomes. Here are some useful interventions. 

Promote the process and generate a supportive environment 

In a recessionary climate issues arise that may have no easy answers. For example, many managers have spent much of their time in full cut-back mode and devoted little time to nurturing or harvesting talent. You may need to intervene to ensure more attention goes on supporting the talent that can drive  renewal and growth. 

Boost employee engagement 

This issue has now penetrated the higher echelons of all but the most antediluvian organisations. Because high levels of engagement are so closely linked to individual and corporate performance there is plenty of justification for focusing on this critical aspect of talent management. 

Ensure that talent receives the attention it deserves. For example, line managers may need practical help with performance management, giving feedback, having effective conversations, coaching and generating high levels of engagement. 

Treat each employee as an individual 

This is part of the secret of successful talent management but not every line manager finds it easy to put into practice. Your own modelling and showing the way may be as important here as any direct intervention you choose to make. 

Identify and develop new leaders 

Depending on your seniority you may need to limit your interventions to setting standards, agreeing benchmarks and strategy. Some senior leaders, though, see it as important to take a personal interest in identifying and developing new leaders and get satisfaction from their involvement. For example, Peter Brabeck-Letmathe, Nestlé CEO from 1997 to 2008 and Chairman of the Board since 2005 argued that, ‘I consider succession planning to be the most important thing of all. I will have achieved nothing if my successor doesn’t turn out to be at least as successful, and hopefully even more successful, than myself. That’s the sign of a good leader. If the company only does well as long as you’re at the helm, and then collapses after you go, you weren’t much of a manager.’ 

What questions should I ask? 

In deciding how to intervene to support talent management in your organisation, there are naturally many questions you might ask along the way. Asking them is a lot easier than finding the answers, but a few well-aimed questions can sharpen up your choice of how and where to intervene. 

Try answering these questions as they apply to you, and in doing so follow where they lead, talking to others in your organisation to explore the possible answers: 

• Am I clear about what I mean by talent?
• Does my view of talent fit with how the rest of the organisation views it?
• Do I know the main boundaries of my talent management role?
• How exactly can professional and specialist staff assist me in managing talent?
• In managing talent, what key features of the external environment do I need to take into account?
• Is our talent pipeline working well and what might be making it more effective?
• How do my talent management practices compare with others in my organisation?
• What tools can I use to identify the right talent, assess potential and promote employee engagement?
• How do I measure the success of my talent management?
• How could I help make us an employer of choice?
• Are my mentoring and coaching skills adequate for enhancing performance?
• Do I take my Gen Ys seriously and am I fully engaging them? 

What levers should I pull? 

In pursuing talent management you may understandably feel that there must surely be levers you can pull to make things happen. Unfortunately a mechanistic view of the organisation is no longer credible. There are no sure ways of affecting change through taking single actions or pulling the equivalent of an organisational lever. Organisations are organic and complex adaptive systems, in which any intervention can trigger unpredictable and sometimes unfavourable results. 

It is more appropriate to consider ‘How can I most effectively influence change?’ Concerning talent management, this is likely to be through intervening in a number of key areas such as: 

• promoting innovation, growth and breakthroughs in performance
• linking talent management to business strategy (see above: make or break decisions)
• pay and prospects
• communication
• awards
• corporate social responsibility (CSR)
• training and development
• gender balance and diversity. 

Promoting innovation, growth and breakthroughs in performance 

Here the intervention that will have most impact is likely to be in helping others to achieve these aims. For example, you may need to eliminate blocks to creative thinking that could impede innovation. Or you could find that only your direct involvement in introducing a system of performance management will ensure that it gets off the ground. 

Pay and prospects 

These are organisational quicksands that can rapidly swallow up even the most efficient manager. Rather than becoming immersed in the arcane world of remuneration and reward systems, stay focused on the critical issue of incentives that will help retain talent. 

Above a certain level, financial rewards cease to act as a motivator. For those with talent, pay for example may be far less valued than prospects or an opportunity to do something new or creative. 

Even in a recession talent still has choices with surveys showing that up to a third of people labelled as ‘high potentials’ are actively considering moving to new pastures. High potentials continue to walk out the doors of organisations because they do not feel the development process is mutually beneficial, and this is almost regardless of pay levels. 

Communication 

Communication can be a considerable source of influence in pursuing your talent management aims. Effective talent managers, for example, will share with people how the business is performing in the downturn or upturn. Potential sources of conflict such as the need for redundancies or restructuring should be communicated sooner rather than later. 

In considering your executive intervention look for mechanisms that allow you influence both at a macro and micro level. An HR manager of a home counties computer software company told us: 

We have monthly management meetings which give staff information on profit and turnover so that people can see how the business is doing. It’s designed so that people can feel management is listening.

 A London advertising agency designates Friday as a day for talking. The HR director says:

Once a week we have Friday drinks in our office kitchen and relaxation room. It creates the right environment for people to be engaged and stimulated. The key thing is open communication. We open the floor to questions and challenges.

We take our employee engagement survey very seriously. It’s not just a process. We are very conscious of the very strong link between how we treat our customers and how we treat staff. We survey all staff on a quarterly basis and the results are fed to the board. Each of the directors will then go to his or her division and discuss the results with their team before deciding what to do. 

Although staff surveys provide vital feedback on employee engagement and can be a useful tool in talent management, they are no substitute for actually talking to people and directly affecting how they think and feel. 

Awards 

Within your sphere of activity ensure there is a commitment to celebrating success. Public moments in which people’s successes are shared and celebrated can have a disproportionately large impact on change. These vital occasions reinforce the talent management culture and help move people further in the direction that you want them to go.

Given the limited opportunities for firms to pay bonuses in a recessionary climate, an awards ceremony can be highly effective in recognising talent and its achievements. It is also a chance for everyone to come together and have a good time. HR Director of Talent Management at BskyB, Sarah Myers, says:

We now have our annual awards ceremony for staff. Anyone in the company can vote for anyone and our CEO and the group of chief executives select the winners. We also have special awards linked to departments. The staff working in sports vote for their annual ‘Golden Balls’ award and our entertainment department has their equivalent of the Oscars, it’s called the ‘Grafters’!

Corporate social responsibility (CSR)

Another area of influence is through interventions around corporate social responsibility. Research shows that high potentials in particular are motivated by organisations that take their social responsibilities, such as charitable activity, seriously and have a strongly ethical culture.

Insurance group Zurich, for example, had 80 teams doing community challenges across the UK in 2008 and Chris McCormack, talent management tsar of the group, commented:

Something we’re proud of is engagement with the community. In the area of corporate social responsibility we’ve being a player for a long time. Zurich Community Trust has driven a lot of activity. It provides significant funding for programmes and work such as the Marie Curie Trust and the Calvert Trust which is a hospice organisation. We have funded an eye hospital in Gujerat and the Association for Physically Disabled People in India. Our CSR programme is a brand within a brand.

IBM employs its most valuable resource – its technology and talent – to create innovative programmes that assist communities around the world. Since the inception in 2003 of the company’s On Demand Community over 145,000 employees and retirees have registered and performed almost 10 million hours of volunteer service around the world.

CSR activities directly and indirectly influence how organisations are perceived by employees, particularly those whose potential they most want to influence.

Training and development

This core element of any talent management system is one you can and should influence. It is also highly vulnerable to reductions during recessionary times. However, companies that are seriously committed to managing talent generally take the opposite view. In our survey we found not a single company had axed its training, although several were making small-scale cuts and adjusting priorities.

A poll in 2010 of global high potentials by Talented Psychology Consulting revealed ‘organisations which responded to the recession by limiting opportunities for challenge and creativity and who played it safe have damaged their ability to thrive as recovery returns, by alienating the very employees who create superior value.’[2]

One talent manager told us:

We understand that people are building a career with us. You come in as a graduate or at any point in your career and continue to grow. We are a dynamic organisation, we make sure people are always growing and learning. We invest in learning. We want to keep people stimulated.

If you choose to intervene in this area, issues you might explore include: 

• What is our T&D effort costing?
• Is it producing a worthwhile return on investment?
• Does it deliver the skills we need to grow the organisation?
• Do our high potentials value the T&D experience?
• Is there a real dialogue between individuals and the organisation about whether the T&D programme meets mutual needs?
• Who decides on which people receive training and development and is the process transparent?
• How aligned is the T&D effort to the organisation’s current business goals? 

Gender balance and diversity 

No need to be altruistic about wanting to affect the gender balance in your organisation. Let simple business sense prevail! Gender balance correlates with better corporate performance, better return on investment, greater innovation and more stock price resilience in crises. In its 2009 survey of women leaders, McKinsey showed that ‘women more than men demonstrate five of the nine types of leadership that improves organisational performance’.[3] So using the organisation’s female talent makes absolute sense. 

Yet in 2010, the UK Financial Reporting Council called for a better gender balance on UK corporate boards to avoid ‘group think’. And while most (89%) American companies have at least one woman at executive committee level, only 32% of European companies and 18% of Asian companies do. Whatever the legislation, women are set to make a significant impact on male-dominated careers. In science, engineering and technology, the number of UK women undergraduates rose 55% in the past 10 years as against a rise of just 29% for men. 

While there seems no real difference between male and female leadership effectiveness, Northwestern professor Alice Eagley, who specialises in the subject of gender differences, finds a number of differences in the leadership styles of business men and business women. 

Men’s styles

Task-oriented
Autocratic
Command-and-control
Punishment-oriented

Women’s styles

Team players
Democratic
Transformational
Reward-oriented 

Discrimination in the workplace is most easily identified by the gap that persists between men and women’s pay. In spite of legislation the gender pay gap is still hovering at 20%. Some might argue that the pay gap is caused not by discrimination but by market forces. In his controversial report Should We Mind the Gap?, J.R. Shackleton, Dean of University of East London Business School, argues that while women gravitate towards degrees in the arts, education and nursing, men head for higher-paid careers in business, law and medicine. Men’s higher salaries reflect, he says, greater stress and the risk of being made redundant. Professor Shackleton adds: ‘Forcing employers to increase pay is an extremely costly business and means job cuts for men and women.’[4] 

The gap starts with gender stereotyping and low aspiration – something which schools and colleges should address. The five ‘Cs’ – clerical, cashiering, caring, catering and cleaning – attract the most women and are where the lowest paid jobs are found. 

There is evidence of female attitudes starting to influence management. Women managers see themselves far more in a nurturing role.[5] They see their job as managing individuals whereas men believe managing is all about task – getting the job done at any price. So what can talent managers learn from this? And how can they show a more even-handed and more integrated approach when dealing with men and women? 

Having women role models in senior management who mentor their younger colleagues can boost the numbers applying for management. Senior women have often had to overcome discrimination. Those who have had to take time off to bring up a family will probably have fought hard for family-friendly working practices such as the right to flexible working, job sharing and being encouraged to make a phased return to work after maternity leave. 

RM: women-friendly policies 

Women-friendly policies can have a big impact as Abingdon-based educational software company RM has discovered. A third of the graduate intake and a quarter of front line staff are women: women occupy at least three senior board positions. HR manager Deb Self says: 

We find that flexible hours and offering women with children at school the chance of term time working adds up to a better work–life balance.

The more women are promoted to senior positions within a company the less likely they are to tolerate inconsistency. At KPMG the gender balance is evenly split but equality peters out the higher you rise in the organisation. Just 14% of profit-sharing partners are women. The firm is investing in women’s networks and coaching and preparing women for partnership. For the past few years KPMG has had an equal pay review, a major step towards fairness and transparency. 

How do we know we’ve succeeded?

If you are a senior executive, you will probably be expected to play an active part in deciding to what extent the talent management system is:

• delivering on its promised benefits
• favourably affecting business goals.

These decisions need to be arrived at jointly with HR professionals, who may be steering the entire talent management system. Their views should be balanced with those of section heads, supervisors and others dealing with the day-to-day reality of the management of talent. However, you can only know if the organisation is succeeding with its talent management process if clear goals have been set for it. So make sure you know what these goals are, and the metrics used to assess them.

Apart from any formal metrics, seek out some of the indirect signs of success. For example, to what extent are more people being given responsibility and encouraged to perform to a high level? Research confirms that where this occurs people are more likely to be productive and with higher profits for the organisation.

Another sure sign is the existence of high levels of engagement and leadership impact. These may also form part of the goals for the talent management system. For example, most global surveys show poor levels of engagement in organisations and low levels of trust in leadership. Seek out the scores for your organisation.

The public sector is increasingly adopting talent management policies and its People Survey [6], run by the Cabinet Office, covers some 350,000 civil servants. In 2009 a snapshot of key variables among its staff showed: 

• 90% were interested in their work
• 85% were treated with respect by the people they work with
• 83% felt they could rely on their team when things get tough
• 79% believed everyone in their team worked together to improve the service they provide
• 78% of staff agreed that their manager was open to their ideas. 

The results also pinpointed where improvements were needed. ‘By establishing this survey’, said Sir Gus O’Donnell, Head of the Civil Service, the organization has shown that ‘it is taking its responsibility to ensure staff are properly engaged very seriously. It gives us the evidence we need to build on our strengths and tackle our weaknesses.’ 

As the Civil Service’s senior executive, O’Donnell therefore has the answers he needs as to whether or not its talent management system is delivering. The challenge of bringing about change ‘is not going to be an easy or quick task, but it is at the heart of raising productivity. Strong employee engagement has a strong connection with productivity and improved employee health and wellbeing. Improving engagement is crucial to delivering better quality public services and better value to the taxpayer and will be one of the key leadership challenges the Civil Service faces in the next decade.’ 

Finally, you can make a reasonable assessment about the success or otherwise of the talent management system by tapping into informal networks in your organisation. What, for example, are people saying about it on the intranet, on blogs and other social media? What do your line managers tell you about how the system is working and do they feel confident with their own talent management role? 

Note: This is taken from Chapter 9 of the book Financial Times Briefing on Talent Management published by FT Prentice Hall and is available on Amazon.

[1] CIPD (2010) ‘Talent Management: An overview’, revised July.

[2] Karen Ward (2010) ‘Talent Management in Recession and Resurgence’, Ashridge Consulting.

[3] McKinsey (2009) ‘Women leaders, a competitive edge in and after the crisis’.

[4] J.R. Shackleton (2008) Should We Mind the Gap? Hobart Paper 164, Institute of Economic Affairs.

[5] Women’s Executive Development Program (2004) ‘Senior Women Executives and the Cultures of Management’, University of Technology, Sydney.

[6] Civil Service People Survey (CSPS) Benchmark Results 2009.