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Strategic Talent Management
February 25, 2008
Effective talent management isn't a hit or miss art. At its best, it's a finely honed strategy that delivers results.
By Sherri McArdle and Jim Ramerman
Ask CEOs and executives what makes a business successful, and you'll hear answers such as "a clear strategy," and "the right people." CEOs know they need a clear plan for achieving their vision; they know they have to put the right people in the right jobs to get there. However, senior executives' clarity gets tested when it comes to making talent management a strategic priority.
Human resources professionals know bridging the talent gap can make or break a strategy's success. Recent events at Merrill Lynch support that position. Following large losses in their mortgage-backed securities business, the board of directors asked then CEO Stan O'Neil to resign. They then quickly turned to outside candidates to find a successor. Interviews began immediately, and the board ultimately chose John Thain, CEO of the New York Stock Exchange.
When situations like this occur, boards may find they have limited time to assess candidates and talent, believing a prolonged leadership void during a period of difficult business conditions is too risky. But it does raise questions about a company's internal talent pool. Is it robust enough? Is bench strength deep enough to fill positions in the event of an abrupt change in leadership? How much attention has been given to developing internal talent, starting at the senior executive level? How much talent has been given exposure to the board? Are there ready candidates at every key position?
Talent Management Defined
Talent management is, at its core, a leadership mindset. It is a chosen culture that unleashes and aligns the passion, commitment, and performance of people at their highest level. It exists in the service of achieving the organization's mission, vision, and business goals. At an operational level, talent management is an organization's ability to attract, retain, and develop people. It creates a sustainable succession and leadership pipeline that ensures ongoing business success through planned and unplanned leadership transitions, and other business events. The phrase "talent management" connotes some important assumptions:
• People are a precious asset.
• Their talents are a key part of their value to the organization.
• The right talent mix is critical to business success.
• More talent can be unleashed through development.
What do leaders in your organization believe about talent management? It's important to know the answer to that question because it's the basis on which strategic decisions are getting made in your organization. We live in a time when the workforce has become a voluntary army in a war for talent. Effective talent management gives people a reason to stay in an organization, and supports a winning competitive position.
Linking Talent Management and Financial Results
A source for the critical importance of talent management in achieving strategic success comes from the Balanced Scorecard Collaborative (BSC). Drs. Robert Kaplan and David Norton (Harvard Business School) developed this approach to strategic management in the early 1990's. By 2006, 66 percent of global corporations used the balanced scorecard, according to a survey by Bain and Company.
BSC helps organizations make the linkages between:
1. What kind of talent and organizational learning supports excellence in internal business processes?
2. What internal business processes must you excel at to meet customer needs?
3. What customer needs must be served (customer value proposition)?
4. What financial objectives must be met to achieve your mission and satisfy stakeholders?
Over the last three years, the leadership consultants at McArdle Ramerman Inc. have used an adapted version of the BSC with clients who are somewhere between implementation and execution. In each case, the linkage between talent management and financial results became clearer during the strategic planning process. A simple truth is highlighted: customer needs can only continue to be met when a pipeline of talent is cultivated in the organization. That pipeline requires a culture with leaders who value their people and develop them. And financial results only occur after customer objectives are met. If financial results are a critical outcome, then talent management is the engine driving those results.
Confusing the Critical with Dispensable
The fight for resources is a reality of organizational life. Leadership places organizational projects into categories of "mission critical," "important," and "nice to do." We all know when push comes to shove organizations sometimes confuse the critical with the dispensable. For example, at the very time a company hits a financial crunch, what often gets cut? Marketing and training. Michael C. Mankins and Richard Steele published results of a study to determine how successful companies are at translating strategies into performance. In "Turning Great Strategy into Great Performance," they assert that strategic plans are delivering just 63 percent of the financial performance they promise. Eleven reasons for the 37 percent performance gap are cited in the study, with 7.5 percent of underperformance due to inadequate or unavailable resources.
Strategic clarity requires setting priorities, making commitments, and following through. It begins with a CEO-level commitment to talent management and development as a powerful way to achieve strategic objectives. To be sustainable, talent management should begin at the top of the organization, where senior leaders set the tone by committing to their own development and ongoing learning.
A Credible Case and Multi-Year Plan
Making an effective business case for talent management as a strategic priority, and getting allocation of the right level of resources, is not a slam-dunk. HR executives can enhance their credibility with CEOs and senior executives with qualitative and quantitative data that supports their argument, benchmarking with other organizations, and a sound business model that integrates strategic success and talent management. Once the case is accepted, assess organizational needs, and develop a credible multi-year plan with attainable goals and measurable outcomes. Enlist the CEO as a champion and assemble an advisory team that enlists key senior leaders and organizational influencers. Metrics tell part of the story, but the success of strategic talent management also will be felt in the spirit of people who not only stay with the organization but who want to truly engage and make a major long-term impact.
Editor's Note: Want to develop more efficetive talent management at your organization? Check back tomorrow to read part two of the two-part talent management series, "Getting Started with Strategic Talent Management."
Sherri McArdle and Jim Ramerman are co-CEOs of McArdle Ramerman Inc., an executive and leadership development firm in upstate New York. They offer consulting services to CEOs and senior executives who want to more strategically manage talent. They recently wrote and released their first book, "Why Dogs Wag Their Tails: Lessons Leaders Can Learn About Work, Joy and Life." Sherri and Jim are available for speaking to groups, and can be reached at www.LeadershipRising.com or 585-325-1210.
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