Organisations with a clear talent strategy are more likely to perform well on business outcomes, including innovation, efficiency and business agility, according to recent Bersin by Deloitte research.
Developing a talent strategy – defined as interlocking decisions related to talent that enable an organisation to most effectively execute its business strategy – remains a challenge for many organisations.
Based on a survey of 454 global 2000 organisations, the research found that just 12 percent of organisations have a clear talent strategy, with advanced and integrated talent processes in place.
However, organisations that create a clear structure for setting talent strategy and engage leaders in the process are best positioned to develop a clear and business-aligned talent strategy.
“Those organisations with a talent strategy are more than four times as likely to be in the top quartile of business outcomes”
Of those organisations that rate themselves at the highest level of effectiveness on business outcomes, at least half have an established talent strategy with some or many advanced processes in place, said Stacia Sherman Garr, vice president of talent and HR research for Bersin by Deloitte.
“Moreover, those organisations with a talent strategy are more than four times as likely to be in the top quartile of business outcomes,” she said.
“These business outcomes include innovation, improving processes to maximize business efficiency, and anticipating and responding to business changes efficiently and effectively.”
Garr further noted that there are additional reasons that a talent strategy matters.
“First, broadly speaking, organisations lack the staying power they once had and they need a way to fight back,” she said.
“Consider this: The average lifespan of a company listed in the S&P index has declined to just 15 years from 67 years in the 1920s.”
Garr said that there are likely many factors contributing to this decline in organisational longevity, but one that cannot be discounted is that innovations are driving disruptions in markets and business models at a historically high rate.
“To compete,” Garr said, “many organisations will need to broaden their focus to more effectively leveraging people – not just capital structures and investments – to drive competitive advantage. Organisations should have a talent strategy to determine how best to do this.”
“Organisations lack the staying power they once had and they need a way to fight back”
4 steps to developing an effective talent strategy
Step 1: business strategy and challenge identification. In the first step, the leaders responsible for creating the talent strategy should conduct a substantial review of the organisation’s current business strategy and goals, the plans to achieve those, and any anticipated challenges. As appropriate, these leaders should also review strategic business unit specific documents.
Step 2: talent need and strategy identification. After developing a holistic understanding of the business strategy, plan, and challenges, the next step is to understand the talent needs necessary to address those elements. This often begins with identifying the necessary talent outcomes to drive achievement of business goals.
This is then followed by the identification of roles critical to enable execution and a deeper analysis of the current situation of those roles. By the end of this step, leaders need clarity as to which talent segments are most critical to the business achieving its goals, and should have a strategy for how to attract, develop, engage, and retain these individuals.
This is the core of the talent strategy. Then these leaders create the strategic talent plan, which outlines how the organisation can achieve that strategy.
Step 3: talent activity design. With the talent strategy in mind, the organisation’s leaders should then adjust critical talent management activities to effectively align with the new approach. This typically involves aligning both the strategy for each individual activity (e.g., performance management or learning), with supporting the processes, activities, and expected behaviours.
Step 4: systems and process design. Finally, leaders are responsible for redesigning the technology systems and processes to align with the design of the new talent activities. In reality, steps 3 and 4 may occur in parallel in some organisations.
Remember – the technology’s capabilities should not drive the decisions regarding talent management activity processes. In short, the technology tail should not wag the talent activity dog.
Source: Bersin by Deloitte’s WhatWorks Brief, Building Competitive Advantage With Talent. Image source: iStock