The most important corporate resource over the next 20 years will be talent: smart, sophisticated business people who are technologically literate, globally astute, and operationally agile. Yet various indicators, from aging Baby Boomers to abysmal U.S. math and science scores, tell us that top talent, already scarce, will only become more so in the years to come. In fact, the U.S. Bureau of Labor Statistics forecasts a shortfall of 10 million workers by 2010, with the greatest deficit to occur in the 25 – 44 age group (the prime working years). And only a fraction of those workers will have the skills needed for managerial positions, much less qualify for the executive track.
Experts warned of this impending war for talent over a decade ago, and leaders of most midsized businesses in search of tomorrow’s leaders would agree: it is on. Its effects will be felt most profoundly by midsized businesses looking to identify and groom the next generation of leaders. Business leaders that fail to make talent management (the acquisition, growth and retention of top talent) a strategic imperative now could find themselves—and their companies—casualties of an increasingly competitive and global business environment.
To ensure their companies will have the right leadership
and/or management team in place and fully functioning when they are needed to meet the organization’s strategic initiatives, CEOs must adopt a disciplined approach to talent management. That means aggressive management of the acquisition, growth, and retention of talent through a rigorous and logical process. Rather than using "gut feel" to make hiring decisions, business leaders must begin to analyze talent opportunities as fully as they would any other business opportunity, that is, identify risks, forecast profitability and develop strategic action plans to ensure successful execution.
Talent management and planning should be closely aligned with the company’s strategic plan and business needs and consider the broadest range of potential of all employees within the firm—not just senior executives. And managers at all levels should be held accountable for the development of talent within their workgroups, with senior leaders actively participating in the process.
This "whole company" approach to talent management is quite different from the traditional approach, which typically focuses on a linear talent procurement process (acquire, deploy, and retain). This traditional process is highly reactive and absent of any form of actual workforce planning. Conversely, a "whole company" approach to talent management is proactive and defines talent as those employees (regardless of level) who have the potential to influence business outcomes.
One of the distinctions of a successful talent management program is the creation of “talent pools” within a company, which provides a reliable and consistent internal source of talent. The development of talent pools makes it easier to train and develop desirable skills and traits in a broader group of employees, which results in improvement of performance across functions and levels. CEOs are finding, however, that to hone the competitive edge they must focus extra effort on the development of above-average talent across all director and executive levels and functions.
That said, at its best, talent management leverages and aligns the contribution of the entire company’s talent to the desired business outcomes through an integrated process that encompasses performance measurement, accountability, and advancement. Proper implementation of talent management consists of four key steps:
1. Conduct an honest, analytical review of the individual talent in the firm, by function and level, with the goal of identifying high performers. Team performance can be evaluated using assessments or performance reviews to assess the strengths, weaknesses of the entire team. This process should result in profiles of the higher performing talent to determine the most critical factors in their individual success.
2. Inventory the internal talent pool against the firm’s critical measurement standards or valued competencies.
3. Map the function, skills, and competencies against the strategic goals and success factors of high performing talent and identify and analyze the gap between high performers and the broader team.
4. Develop a strategy to close the "talent" gap, which includes employee training and development of recruiting policies that reflect the newly identified (and desirable) success factors unique to the company.
Implementing a strategic talent management process prepares business leaders to compete in the global economy and capitalize on opportunities. It allows them to:
- Become "proactive" versus "reactive" to the demand for critical talent needed to respond to company and industry changes;
- Identify success skills and traits that can be developed in all employees, and minimize training costs by focusing on key development areas unique to the company and its culture;
- Provide greater consistency among cross-functional teams with identified specific skills and competencies;
- Improve the recruiting process by measuring candidates against valued competencies unique to the company.
To be most effective, talent management must be aligned with company strategy, define leadership criteria that are consistent across all functional areas, and identify the technical skills (analytical ability, experience/skills, intelligence) that are needed for growth. By applying a well-orchestrated approach to talent management, organizations will be better able to ensure they have high performing team members in place who will significantly advance the company’s business goals and profitability objectives—both now and in the future.