Career Development is Back: Returning to the Forefront
As organizations continue to understand and focus their talent management strategies, one of the most important processes they are focusing on is performance management. Our High Impact Talent Management® research identified performance management as the area of talent management which actually drives the highest levels of business impact. Why? Because as we all well know, the performance of an organization is largely driven through the direction, coaching, and strong support of each individual’s manager.
We identified seven independent areas of employee performance management: goal setting, goal alignment, self-assessment, manager assessment, 360 assessment, competency management, and development planning. Because of today’s tight labor market, this last area, which is often the most overlooked and amorphous of all, is rising to critical importance.
The nature of the Talent Shortage
Let us first set the stage. Our research indicates that global corporations today have some severe talent shortages: 53% of organizations have severe shortages in mid-level managers, 48% in technical professionals, 44% in director level managers, and 39% in sales and service personnel. We estimate that the total shortage of “skilled workers” in US corporations will pass 10 million workers by the year 2012.
Now this “talent shortage” does not necessarily mean that we do not have enough people to hire – rather it indicates a shortage of skills. Healthcare providers cannot find enough nurses; defense contractors cannot find enough trained engineers; product manufacturers cannot find enough experienced sales representatives; financial services and retailers cannot find enough mid-level directors. While many organizations are now working with colleges and universities to help build this talent pool (Raytheon, Northshore Health Network, and others work closely with regional universities to set standards for graduates they will hire), most companies find they must develop such talent.
The Pinball Model to Career Development
We have identified two broad approaches to developing people in organizations. The first we call the “pinball model.” In the “pinball model,” employees are told to “manage their own careers,” and they essentially bounce from job to job like pinballs. As one senior VP of HR told us, some times these people bounce into the right hole (the right job), and other times they drop through the bottom of the machine (they leave the company).
The pinball model is built around the theory of rugged individualism. Employees who work hard and seek out good career opportunities in the company will develop themselves and get ahead. I distinctly remember this motto when I worked at IBM in the 1980s. While my manager was an excellent leader, he had no idea what possible roles existed for me at IBM. After nearly 10 years of work in sales and technical service, I finally decided that IBM was not for me. Did I know what careers and jobs were available? No, I was only aware of opportunities I found through my own contacts and sphere of contacts.
The pinball model assumes that the organization has an excellent pipeline of new people joining at all times. It assumes that people will find better jobs and that those which are not selected for promotion will find good positions themselves. It assumes that managers will act on behalf of employees and support their search for better positions that leverage their strengths. And it assumes that managers will spend time trying to develop employees for future roles, not just coach and manage them to drive performance in their current job.
The Pinball Model Fails
As we analyzed the data from our High Impact Talent Management research we found significant evidence that this model is failing. Consider the chart below. This chart graphs three business impact measures from our research across four different types of career planning: individual (done by the employee, the pinball model), manager (manager-led development), business-unit (the business unit creates career paths and develops people), and enterprise level (the enterprise itself creates career paths).
Effect of Career Planning on Business Outcomes (c) Bersin & Associates
What this data clearly shows (and our anecdotal research fully supports this) is that organizations which use the pinball model actually show negative returns. This approach is actually worse than no career development program at all. When one considers it, it makes perfect sense. When an individual is told to “manage their own career” they are essentially told that the company is not interested in developing them. They are at the mercy of their own efforts to advance their career. And worst of all, the organization cannot fill the critical talent gaps with the best qualified candidates, because there is not real knowledge of who these people are and how they can be developed into these jobs.
The Deterministic Career Planning Approach
So what is the alternative? The alternative is what one would call a “deterministic” career planning program. We use the word “deterministic” because it is developed to formally develop and move people into the most business-critical and appropriate positions. When an organization like Northshore Healthcare Network or Raytheon identifies gaps in engineering positions, nursing positions, or other critical positions, the organization develops a career planning program to fill these positions.
What does such a career planning program look like? It can actually be quite complex, and in most cases it takes several years to implement. It typically includes the following elements:
- A ladder of positions in both management and technical career paths which show employees and managers a visual path of opportunities they can follow over many years
- A set of competencies and skills required at each level, to both coach and condition employees to look for the right positions
- A set of training and development programs to help employees and managers prepare themselves for various positions in the career path
- A set of self-assessments and job descriptions to help employees and managers understand whether they are qualified or suited to the positions available.
A Career Planning Approach at Fidelity
One of the most innovative of these programs we have identified include a program developed by Fidelity. Fidelity realizes that they have an ongoing critical talent gap in their call center operations. Most Fidelity employees actually work in call centers. These positions range from marketing to sales to advisory services, support, management, and technical operations.
Fidelity found that typical call center high-performers who are not well managed will leave the company after 24-30 months. After much analysis, the workforce planning team realized that a high performing call center employee becomes bored or disenchanted with their work after about 18 months, starts seriously looking for a new job around the two year mark, and then leaves soon thereafter.
Yet from Fidelity’s standpoint this is a disaster. After 12 months or so these employees are highly trained, productive, and creating significant customer value. How could Fidelity provide a career planning program which would keep the high performing/high potential employees in the company and provide them the career development they desire?
A forward-thinking HR director at Fidelity came up with a powerful solution. Through a “swat team” approach the company canvassed managers and developed a clear and consistent set of job descriptions, career paths, competencies, and self-assessments for each position in one of the call centers. This required significant effort, as one may imagine. Many of these positions were developed internally and were being adjusted and changed by call center directors regularly. Development of the career planning system required close alignment with these managers.
This information was then used to implement a new career development portal. The portal shows graphical representations of career paths and gives users access to job descriptions, competencies, and self-assessments for each and every job. They even added a section called “People who like this job like….” and “People who don’t like this job don’t like ….” To help employees self-assess what positions they would like to pursue.
And here is the next piece of magic. Employees were not given access to the system until they reached approximately 12-18 months in their current job (at the discretion of the managers). Fidelity did not want people shopping around for new jobs before they became proficient in their current job. In fact, employees have to achieve a certain performance rating before they gain access to the new system.
The system was a huge success. The system took approximately 2 years to develop and roll out and within a year after launched Fidelity saw a reduction in turnover of more than 30%.
The biggest challenge the HR organization faced was the need to fully gain acceptance by line managers. Rather than “hoard” top employees, managers were told that they must not only publish job descriptions internally, but encourage high performing employees to seek out new positions. Managers themselves had to be refocused and evaluated on the success and mobility of their employees, not solely on the performance of their business units.
Career Development is Critical to Your Business
Consider the impact on your business. Career development is now one of the hottest “new” programs in many organizations. While often a small and low priority process within performance management, it demands a top-down strategy. It requires skills in competency management, assessment, and development. But it is worth it. In today’s labor market it is one of the sharpest tools you can use to strengthen and improve your organization’s talent.
 Bersin & Associates High Impact Talent Management research, 750+ global corporations, more than 1 million data elements included, conducted in Fall of 2006 and Spring of 2007, released in May of 2007, available at www.bersin.com/hitm .