Talent Management Revisited: Where are we now?

Talent management has now become one of the most talked-about topics in business and HR.

Companies around the world are reorganizing their human resources teams to create Chief Talent Officers, Vice-Presidents of Talent Management, and Senior Talent Executives. And the software industry supporting this space continues to explode: Successfactors and Taleo are rated among the “hottest stocks” for 2011, and several other talent management vendors are planning on going public.

So what IS talent management today?

Well when we first started doing research on this topic (around 2004 or so), we defined talent management as an integrated set of business processes for managing people. This includes the practices of recruiting, staffing, onboarding, compensation, performance management, coaching, training, leadership development, succession management, career management, and talent mobility.  As our framework points out, in theory these various HR processes all fit together like tightly woven puzzle pieces and make up a complex set of business processes for management.

Our research has shown over the years that when companies develop these processes well, they actually make more money.  Their employee are more aligned, quality goes up, customer service is higher, and leadership executes more consistently.  This is why most companies want to “implement talent management” and have a leader in place to pull these pieces together. (Please read “Is Talent Management: Too Important to Delegate to HR” for more background.”

In reality, however, things are much more complicated.

We just finished a series of meetings with our advisory board (HR, L&D, and talent leaders from some top global organizations), and I want to note a few interesting findings (these companies included General Mills, MetLife, Mastercard, Kaiser Permanente, ADP, Lockheed-Martin, Qualcomm, Credit Suisse, and others):

1.  Talent management leaders struggle with many important details.

How do I best assess leadership in mid-level employees?  How do I develop cross-functional teams of specialists?  How do I get my business leaders to act like coaches and not bosses?  How do we train our first and second line managers on a consistent and ongoing way without forcing them to come to classes?  How can we change the culture of our top executive team when a new CEO joins the company?  What are the characteristics of “great leaders” in our company and how do we replicate these models?

The list goes on and on… and there is no “perfect answer” to any of these questions.

So if you think talent management is easy, think again.  Software vendors can sell you software – but the hard part is defining, developing, and implementing the right processes for your organization.

2. Organizations can only handle a few “critical” talent problems at a time.

While every talent leader would like to have world-class solutions all the elements of talent management, companies can really only focus on a few things at a time.  Great leaders are like spotlights:  they figure out what the “one important thing is” right now.  So at one of our clients, a global financial services company with a transformational new CEO, the “big problem” is changing culture and behaviors to drive innovation and risk-taking.  At another company the problem is one of driving accountability into the organization.  A third is focused on building deeper technical skills to compete for new business opportunities.  And another is focused very heavily on globalization, to support growth in Asia.

In reality all these companies have all these problems – but we find that highly successful teams focus on only a few at a time – and then they build their talent management strategies around this focus.

3.  Companies understand the concepts well.  But the market moves slower than one would think.

For all the seminars, workshops, and books on this topic out there, organizations are still fairly early in this journey.  Our research shows that around 20% of all organizations we survey have a mature strategy and talent leader in place.  (This is four times higher than five years ago.)  But almost half the companies we survey have little or no strategy yet.   And once a talent leader is in place, it typically takes 3-4 years before a truly integrated program takes hold.

Remember that ultimately this not an HR topic – this is a business topic.  Until organizations can get business leaders and line managers to implement and participate in all these processes, they don’t take hold.  And putting together an integrated talent management program is not an “end” – it is a continuous, changing process.  Even companies like Google, which is now ten years old, change their management processes as their business changes.

4.  HR organizations are underskilled to drive the potential for talent management.

One of the most interesting discussions we’ve had with our advisory board is the need for better skills among HR generalists and business partners.  You, as an HR or L&D leader, can design all the programs you want – but ultimately these programs are “owned” and “supported” by business and HR managers at the local level.  If these individuals do not understand the concepts of coaching, collaboration, leadership, assessment, feedback, social networking, and the other modern principles we have today, the program falls flat.

Our new HR research (which will be launched next week) shows that a lack of HR skills is the single biggest failure point in HR programs today! What holds back success?  Not technology.  Not strategy.  Not money.  It is skills.

Our new High-Impact HR research, which is the culmination of two years of study, showed that the single biggest inhibitor to business impact in HR is the skills of the HR team.  More on this next week.

5.  Talent Acquisition (Staffing and Recruiting) is now, finally, becoming a part of the talent management team.

One of the more startling things which we found in this round of meetings is that today, for the first time in years, a majority of talent leaders are now trying to tightly integrate their recruiting (talent acquisition) teams into the talent management process.  This means that the strategists and OD experts are now spending more and more time worrying about recruiting.

Let’s face it:  in most companies recruiting is very much an “operations” problem.   Very mature companies have understood the highly strategic nature of staffing for years – but the people who “run” recruiting are very much operations managers.  They worry about time to hire, cost to hire, volume of candidates, the productivity of different sourcing strategies, and the ROI of various employment branding and referral programs.  These problems are very operational in nature, so they have been managed by the numbers.

Now that we are entering the global economic recovery, companies have found that the whole problem of talent acquisition has changed.  Not only are companies finding tremendous skills gaps in many parts of the world (countries like China and Germany already have huge gaps in engineering skills), but the nature of the employment contract has changed. Companies now attract people in a very dynamic way:  through broad employment branding programs, social networking, local job fairs, online videos, and direct sourcing.  Our High-Impact Talent Acquisition research found that recruiters today have shifted upwards of 30-40% of their sourcing from contract recruiters to in-house tools like LinkedIn, The Ladders, and other online networks.  Employees learn about employers on websites like Twitter and Glassdoor.com, making it important for employers to monitor their employee brand everywhere.

And when a company wants to change its workforce (like the examples above), they must drive this shift into the recruiting function immediately.  So the head of staffing cant take orders only from line managers, he or she must be totally aligned with the company’s overall talent management strategy.

A great example of this is Philips.  Philips, one of the world’s most successful electronics and lighting manufacturer, is in the middle of a global cultural change to drive innovation and risk-taking into the company.  To drive this change, the head of HR has been rolling out a new and focused performance management process.  Employees will be held accountable for goals and will be evaluated on a new set of management criteria.   This program has been rolling out for two years, and it has had huge impact on business success already.

The head of this program, a leader in the talent management organization, realized after a year of effort that their plan and strategy had not yet reached the world of recruiting.  The company redefined its model for management and employee evaluation, but did not take the time to drive these new behaviors into the recruiting process.  In year two of the program, once the internal tools were in place, he shifted his efforts toward recruiting – and he found, as most companies do, that recruiters worked all over the world in independent groups and used different tools and approaches driven by local management.  There was no “strategic” recruiting process in place yet.

So as phase two of the culture and accountability initiative, the company focused on talent acquisition.  The company built new tools for candidate assessment, new tools for job descriptions, and new employment branding for the company’s websites and recruiting tools.  They focused the talent management program “outward” – towards the candidate and “intake” part of the company.   A logical idea now that we think about it – but not at all obvious at the beginning of the program.

Nearly every executive we met with these last few months told us they were shifting in this direction.  Talent management wont really work unless you look at the entire pipeline – from candidate through alumni.   This is one of the big new focus areas for us in 2011, and it should be for you too.