HR Daily Article, 11 April 2011
Organisations with outstanding talent-management practices outperform their counterparts by eight times total shareholder return, yet only one in five employers treat talent management processes as seriously as their annual budgeting process, research by the Hay Group has found.
According to Hay's Tackling talent management whitepaper, more than two thirds of company valuations are based on "softer" intangible assets such as knowledge and know-how, brand, key relationships and their pool of talent.
However, many organisations shy away from the people side of the business equation because it is "messy" and "hard to get right".
Even those that do take talent management seriously can fail to achieve a return, because "not all organisations invest in the right way to reap the benefits".
According to the whitepaper, the 10 most common obstacles to effective talent management are:
1. No clear vision from senior leaders on what talent management can do for the organisation;
2. No clear definition of what to aim for - or "what success will look like here";
3. Talent management is seen as an HR function instead of a business accountability supported by HR;
4. No distinctive talent proposition that differentiates the employer from the competition, or one that's "disconnected from reality";
5. Line managers fail to address underperformance, even when chronic;
6. Focus is mainly on development as "the easy default option", at the expense of tough measures to get better deployment;
7. Not enough "quality" time devoted to talent management;
8. Line managers confuse performance with potential;
9. Aspirational values and behaviours bear little relation to what's rewarded; and
10. Lack of talent management infrastructure and online systems.
What does cutting-edge practice look like?
In contrast, best-practice talent management ensures the business strategy is informed and influenced by talent insight and predictions, the whitepaper says.
Talent-management measures are "calibrated and comparable", and where appropriate, remuneration is linked to talent KPIs.
Best-practice talent management facilitates informed decisions about where talent investments will be placed in light of predicted returns, and ensures "objective talent dialogues" permeate the whole organisation.
Organisations at the "cutting edge" also adjust their employer branding efforts and EVP to meet evolving business and talent requirements, the whitepaper says.
Six key talent management questions:
According to the whitepaper, HR can "challenge existing practice" by answering the following questions:
1. What kind of talent do you need to realise your strategy, and how is it defined?
Talent-management activities should be derived from the organisational strategy with regard to future business needs;
2. How do you attract the best talent to meet your needs?
Employers should consider looking for talent in different places using different methods, and be willing to adopt an EVP that is distinctive - even if it involves "breaking the mould";
3. How do you select the best talent to achieve your aspirations?
HR should differentiate performance and potential, articulate benchmarks, and be clear about the culture, values and behaviours the organisation is trying to deliver;
4. How do you best develop your talent to meet your future needs?
ROI should be reviewed on an ongoing basis to ensure investments in development are effective, and HR should consider moving high-potential employees out of their technical comfort zones early to help them build leadership skills;
5. How do you best reward, engage and retain your talent?
Talent management should be "rigorously aligned" with engagement results and reward incentives, starting with attraction, while retention should be tracked "as a matter of course"; and
6. How do you best deploy, redeploy and manage the exit of your talent?
Employers should institute an upward reporting, line-led objective process for reviewing and deploying talent, and ensure line managers dealing with underperformers have adequate support.
