Talent Management

BUILDING SUSTAINABLE TALENT THROUGH TALENT MANAGEMENT Benefi ts, Challenges, and Future Directions Rob Silzer, Ben E. Dowell

Talent management systems and approaches are becoming widely used in many organizations, as this book demonstrates. In this book alone, over 40 companies are mentioned for their often leading – edge talent management programs or processes. We think there are some common themes, benefi ts, and challenges identifi ed in the chapters.

Talent Management Themes Several talent management themes or principles have emerged from this book across organizations, systems, and approaches. These are suggestions or approaches that have been proposed in various chapters for building effective talent management pro- cesses, programs, and systems. (See Table 21.1 .)

Driven by Business Strategy

The most fundamental theme in this book is the importance of having business strategy drive and determine processes and

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746 Strategy-Driven Talent Management

programs for talent management. There is widespread agreement that the effectiveness of talent strategies and talent management approaches can be judged by whether they add value and help to achieve business strategies. Gone, or going, are the days when human resources (HR) could set itself, and its processes, apart from the business objectives and goals. This book contains many examples of how strategies can, and should, directly determine the design and implementation of talent strategies and approaches.

Of course, the talent processes must be designed and scaled to meet business needs and specifi c, measurable goals. They also must be adaptive as business strategies change for a variety of reasons, such as new competitors, changes in customer demands, acquisitions, mergers, market shifts, market globalization, tech- nological advances, and others. They must take into account the availability of talent and the feasibility of a particular talent strat- egy. In addition, they need to be integrated with the talent strategies of the organization and other HR functions and processes.

Generally this means that there is no one best way to design and implement talent management. It must fi t the business need, the talent objectives, and the organization culture. The talent management fi eld is moving away from one – size – fi ts – all programs and toward tailored or customized approaches. While some basic components might be similar (such as starting a college recruit- ing program), the specifi c design and implementation plans need to closely fi t specifi c organizational needs. For example, this may be why many corporations have designed their own

Table 21.1. Key Themes in Talent Management Approaches

1. Driven by business strategy 2. Requires differential investment 3. Accepted as a core business process 4. Integrated across HR practices and processes 5. Engrained as an organizational and cultural mindset 6. Practical, effi cient, and easy to use 7. Includes relevant outcome measures 8. Future looking

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Building Sustainable Talent Through Talent Management 747

internal executive leadership programs rather than use generic publicly offered university programs. Ultimately the selected talent management approach needs to add strategic value, and human resources needs to fi nd ways to demonstrate that value to the leadership of the organization.

Requires Differential Investment

There is an emerging view that effective talent management requires organizations to differentially invest in various employee groups and not to invest equally in all employees. This is a logi- cal extension from being strategy driven. Those businesses, orga- nizational functions, and talent groups (such as high – potential individuals or scientists in a research-based organization) that are critical to achieving the business strategies need to receive a dis- proportionate share of resources to achieve the strategic goals.

In the days of limited resources, this means that some func- tions and talent groups will get a greater share of the resources, while other nonstrategic groups will receive a smaller share of the resources. In fact, some of these nonstrategic groups, such as call centers in some companies, are being outsourced and man- aged by external companies, often with the goal of reducing costs and company resources that are provided to them. This has raised some concerns about how far to go in differentially investing in some groups and not others. What is the right balance when deciding the extent of development resources to devote to high – potential talent versus the other 80 to 90 percent of employees? At what point do other employees realize that they are not get- ting a fair share of the resources and reduce their commitment or engagement or look for job opportunities elsewhere?

Simultaneously this puts greater attention on how to identify and invest in strategically important groups. Which groups or functions are more central to the business strategies than others? How do you decide who is worthy to join a high – potential pool? What level of invested resources is needed to build and sustain the talent, and at what point does investing more have dimin- ishing value? What is the impact of investing in one group for a period of time and then shifting resources to another group as the organization strategy changes?

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748 Strategy-Driven Talent Management

Accepted as a Core Business Process

In several companies mentioned in this book, the talent review and planning process has become a core business practice along- side the strategic planning process and annual operating plan reviews. These three are the core business practices that guide busi- ness decision making, work efforts, and investments. Only recently has the talent process started to be accepted as an equally impor- tant core business process. It needs to be aligned with the other business planning processes and might logically follow the business planning and precede the operational reviews.

Talent needs to be seen as a fundamental strategic business resource in the same way as fi nancial assets. As we develop stron- ger measures of the strategic and fi nancial impact of talent, it is becoming clear how central talent is to the success and survival of a business. In the years ahead, we anticipate that talent man- agement will be valued and respected as much as fi nancial management in business organizations.

Integrated Across Human Resource Practices and Processes

It is important that the talent management process, programs, and systems be coordinated and integrated with each other and with other human resource functions and programs. This is for both effi ciency, so various efforts are not working against each other, and for effectiveness, so different program areas are col- laborating to achieve shared goals. Often these shared goals are the execution of business strategies.

Engrained as an Organizational and Cultural Mindset

The highest level of effectiveness is often characterized by hav- ing an organizational or cultural mindset around talent man- agement. This occurs when supervisors, managers, leaders, and executives have a commitment to effectively managing talent to achieve business strategies. They take responsibility and have accountability for building and retaining the needed talent in their own organization. Often this is accompanied by a set of organizational values and beliefs about the business need for talent.

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It not only permeates management and executive decisions but also pervades the shared beliefs of the entire organization. It becomes a fundamental premise for the existence and success of the organization.

Practical, Effi cient, and Easy to Use

Processes and programs designed to achieve talent strategies need to be practical. They need to be feasible to develop and implement. We hope that Human Resources is moving past the era of big, complex, and often prepackaged programs that do not actually meet a business need. These programs often deliver many extra features that are unnecessary and may lock the orga- nization into an infl exible system or set of tools that is diffi cult to modify as strategies change. It is both costly and diffi cult to redesign complex programs that have linkages throughout the organization.

Many organizations are trying to design and execute talent management programs or processes that have a clear, strong link to a specifi c business need. That means that the program must effi ciently focus on that need. Large, complex programs often include elements that are not needed and can divert the focus of the organization from what actually needs to be done.

Programs and processes should be easy to explain and use. Managers and leaders should be able to understand a program and see the value and benefi t to their own business objectives. Our experience is that the closer a program is linked to the underlying business need, the more quickly managers and lead- ers will understand and implement it. Managers and leaders have a long list of their own work priorities, and a particular tal- ent management program will get little attention or support if the business link and the program value are not readily appar- ent. Program implementation should be straightforward and easy. The process should be sustainable through normal business cycles and not put unrealistic demands on people. It should also be easy to maintain. For example, if the program relies on an underlying database, then that database should be easy to update and contain only the critical information (and not “ the extra nice to have but diffi cult to update ” information).

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Includes Relevant Outcome Measures

Ultimately any talent management approach needs to deliver results that help to achieve a business strategy. This is perhaps the weakest link in the talent management process. Human Resources is now trying to identify the outcomes that need to be measured to determine if a talent program is effective or not. While there are outcomes that are frequently measured, such as voluntary and involuntary turnover and retention, it is important to iden- tify the desired outcomes for specifi c strategies and particular organizations. The importance of measuring turnover and reten- tion in a sales force may depend on the strategy of the company (for example, a company may want to retain only the very best sales representatives, not sales representatives in general). Using generic business or even industry benchmarks for these measures may not be helpful or relevant to a specifi c situation.

In addition, we need to develop better metrics for talent man- agement programs. For example, some organizations invest a lot of resources into the development of high – potential talent. Historically there has been a reliance on measures of immediate manager reviews or a lack of failure by the individual to deter- mine outcome success. However, these are very gross measures and do not usually provide a good measure of whether the person actually was developed in the experience. We need to develop better measures of actual development, such as setting and meeting specifi c learning objectives, demonstrating what was learned in a special project or assignment, or demonstrating through performance that real development had occurred.

The eventual success of talent management in organizations rests on identifying the important outcomes and developing accurate measures of those outcomes. Human resources needs to become more sophisticated in providing objective evidence that a program or process is actually delivering the desired outcomes. HR metrics need to be better designed and more data based. HR must hold itself accountable for proving the strategic value of the talent management programs and processes. Part of this effort should focus on evidence – based or data – based decision making. That evidence is often objectively collected data but might also include other sources of data, such as separation interview data

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or the collective experience of the recruiting team. The measures need to be determined ahead of time, collected in standardized ways, and objectively analyzed. A data – based approach can signifi – cantly improve the quality of the decisions and also raise the stan- dards for programs and processes.

The decisions regarding programs should focus on what works and what does not. If something is not working, the talent pro- fessionals need to change it and consider other alternatives. Sometimes this may require trying several things to see which works best and letting the outcome data guide that fi nal decision.

So it comes down to three basic steps: identifying the right outcomes for evaluating a program, developing the best possible measures of those outcomes, and making data – based decisions on the effectiveness of the programs and processes.

Future Looking

A paradox in most business decisions is that data – based decision making by defi nition is backward looking, relying on data col- lected on the past. Similarly, when talent management decisions are based on data collected on past events, the results capture the past, not the future. The future is inherently more ambigu- ous and unknown than the past. To predict future success, past data must be extrapolated into future situations and adjusted accordingly. This requires decision makers to consider what future situations might be like and take that into account when making business decisions.

Strategies are also inherently future oriented, focusing on how to approach future, anticipated business situations. The goal of business is to be successful in the future, not the past. This requires that decision makers, including talent professionals, consider data from the past, along with personal experience and insight, to predict what actions to take in the future. Ultimately talent decisions should refl ect data – based judgment, being guided by data but using judgment to extrapolate to the future. This takes a deep understanding of the data as well as the judgment and courage to make predictions about the future.

The ability to make data – based judgments may not be widely distributed. Most people can probably learn to understand the

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data and to make short – term predictions about this afternoon or tomorrow. However, the ability to predict one year ahead is not common. And senior executives must make predictions about the longer – term future of the business, three to fi ve years into the future. Some do this by sticking close to the data extrapolation, but the most effective executives have visionary skills and know how to adjust linear data predictions for a changing business envi- ronment. Similarly talent professionals will need to make similar data – based judgments about talent and predict their future effec- tiveness and contributions. It seems likely that the ability to make accurate, future – oriented talent predictions will be seen as just as valuable as the ability to forecast future business conditions and identify the strategies needed to address those conditions.

Benefi ts of Strategy – Driven Talent Management The chapter authors have pointed out the benefi ts of various tal- ent management processes, programs, and approaches. Here is a summary of the key benefi ts of taking a strategy – driven talent management approach:

Directly supports the achievement of business strategies Facilitates strategic nimbleness and the ability to adapt quickly to changes in strategy Supports and pursues the effi cient use of resources by selec- tive investment, focused programs, and coordinated efforts Integrates and connects various efforts and programs to allow easy alignment and simple transitions from process to process Focuses everyone on pursuing shared company goals and objectives and encourages collaboration and teamwork Involves forward planning and focuses attention on future strategic needs Becomes a core business practice that provides a distinctive talent brand for recruiting and retention Becomes a mindset that permeates management decisions and holds managers and leaders accountable for talent resources Provides a durable competitive advantage in the marketplace Ensures strong links between talent decisions and business decisions