The evolving field of talent management continues to bring up a range of new challenges, and there are 5 key macro trends for HR leaders globally, writes Marc Effron

1. The ratings obsession ends, and the performance management obsession continues.
If HR leaders and consultants put as much energy into fixing performance management as they do writing and complaining about it, we’d be far further along this journey. The past few years have seen a near obsession with this topic, marked by “pro” and “con” articles in Harvard Business Review and plentiful opinions on the topic presented as fact.

The low point has been the endless debate over a minor element of managing performance – ratings. The debate (they’re fine vs. they’re horrible) will end as the evidence mounts from objective sources like CEB and the Center for Effective Organisations that companies get better outcomes with ratings.

The larger sense of urgency around performance management redesign/improvement will continue, driven by HR and leaders’ noise about the process. That noise seems to be driven by both lack of agreement about the purpose of performance management (Improve performance? Evaluate? Develop?), well-intentioned attempts to make it easier and quixotic attempts to make people enjoy goal-setting, coaching and reviewing.

While the energy around performance management may drive simplification of the process, we’re not optimistic that it will help most companies realise performance management’s true potential. The power of performance management comes from brilliant goal setting, not flawless reviews, so until companies put effort and accountability into that area the quest for truly effective performance management will not be realised. We’re seeing some effort but little accountability.

“The performance obsession will be overshadowed by a focus on predicting potential as senior teams increasingly differentiate their talent investments and demand more accurate insights to guide them”

2. Potential is the new performance.
The performance obsession will be overshadowed by a focus on predicting potential as senior teams increasingly differentiate their talent investments and demand more accurate insights to guide them. The challenge for HR professionals and consultants is that only two things are scientifically proven to predict potential in every situation – intelligence and select elements of personality.

So, when consulting firms suggest they’ve found the secret ingredient to predicting upward potential, they’re either re-labeling those two constructs or stretching the truth. The two most popular potential models highlight the challenge of accurately assessing potential.

Korn Ferry and CEB each offer a potential model and diagnostic tools that they claim is “the” accurate model. There are meaningful differences between the two, so either one of them is right and one is wrong, or both are not right.

Two encouraging sub-trends should help here. Data analytics is still glorified turnover analysis in most companies but capabilities are rapidly evolving. Within 5 years we should have better firm-level predictors of potential. Similarly, we’re seeing (a little) more work on understanding how the other half of the potential equation – the company situation – factors into accurately predicting an individual’s potential.

3. The talent-focused CHRO
The capability to improve talent depth and quality is among the top 3 factors CEOs are requesting in new CHROs (and the reasons select CHROs are being replaced). The trend to reorganise HR to have leaner COEs, high-level HRBPs and service centre-based transactional work means that – except for executive compensation and the occasional lawsuit – CHROs will spend disproportionate amounts of time involved in talent management.

In transformed organisations, the line will increasingly blur between the traditional CHRO role and the VP talent management role. As long as responsibilities are sorted out between the two roles we believe this is a positive trend which ensures even greater focus on this key area.

“Companies will be dragged kicking and screaming into greater transparency”

4. Transparency gets traction
Companies will be dragged kicking and screaming into greater transparency, partially by younger generations demanding it and increasingly because transparent companies show no ill effects from their openness. In addition, our proprietary data from the executive teams at 50 companies shows that executives (not necessarily HR) support a talent philosophy of near total transparency in communicating performance and potential. That same data shows that today most companies are moderately transparent at best.

When Bridgewater Associates videos every meeting and makes them available to any employee and Buffer publishes their budget and everyone’s salaries, employees will be highly sceptical of companies that say they’re not ready to be transparent. If you don’t believe in transparency, we’d ask what is the ideal length of time to lie to your employees about their performance and potential?

5. Talent teams turnover
The first wave of talent management hiring happened between 2005–2015 as companies staffed this new slice of HR as best they could from a collection of HR generalists, OD/OE types, learning folks and leadership development leaders. Over that period, we saw talent management evolve into a more strategic, data-driven and process-oriented field – an evolution that clarified the capabilities that differentiate great talent management leaders.

We’re now seeing that initial array of talent being sorted out, with talent-oriented generalists and business-loving OE types getting the VP talent roles and learning, OD and leadership development people sub-specialised underneath them. The key variable in our data that we believe explains this trend is that learning folks self-disclose as being least interested in their company’s success and most interested in helping individuals succeed. With the profession now 10+ years old, there are deeply experienced talent professionals available and companies are replacing “humanistic” talent leaders with more “capitalistic” ones.

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