Progressive organisations that have a more effective approach to talent management are beginning to reward managers for being talent scouts and exporters of talent, in order to overcome any myopic bias in their thinking and approach to managing teams in their individual function, according to a global consulting firm.
Generally, HR efforts to engineer sophisticated processes and talent review sessions in order to drive better decision making have only had partial impact, said Kate Bravery, talent solutions leader, growth markets, Mercer.
As such, HR managers need to find a compelling way for line managers to see the impact of making informed talent decisions and then equip them with the knowledge and tools to make a difference.
“We now need to address the crux of the issue – the decisions being made by line managers on the ground,” she said.
“Interviews that focus on core skills, not just competencies, promote discussion around a new hire’s future contribution, not only what they bring to the table today. Improving talent decisions cannot be down to HR alone.
“If people are a company’s most important asset and a driver of shareholder value, then managers at all levels of the organisation need to be responsible for the decisions they make around hiring, developing and incentivising people.
“Currently, busy managers do not always see the powerful link between improved talent decisions and business results.”
Talent management shortfalls
Concerns about the so-called “war for talent” have been high on the corporate agenda for some time, however, Bravery said many companies still struggle with how to make better talent decisions.
Mercer research revealed that, in Asia Pacific, less than 60 per cent of companies hold managers accountable for developing people.
Australia also ranked the lowest in terms of HR confidence in managers’ ability to execute performance management processes.
“For too long, companies have acknowledged that talent is their greatest asset and a key source of competitive advantage, which makes it critical for talent decisions not to be taken lightly,” she said.
When compared against classic business decision-making criteria, Bravery added that the current approach applied to talent management is lacking on all fronts.
“Talent decisions need to be given the same consideration as other significant business decisions,” she said.
“For example, a head of operations would weigh a multitude of factors when deciding whether or not to invest in a new building.
“He or she would look at the short-term value, as well as potential appreciation over the longer-term.
“He or she would consult independent data and assess the risks, probably consulting a range of people to make a balanced decision – rarely would it be emotional or reactive.
“But if you take that same head of operations and ask him or her to make a hiring decision, or decide who from their team to promote, we observe quite a different decision-making process.
“He or she will probably rely on intuitive judgements and take a short-term view, based on their own needs.”
Deriving real value through talent
Bravery also observed that talent discussions have swung too far away from a focus on the role, towards a focus on the person, and she said deriving maximum value from a critical role and deriving maximum value from an individual are two very different things.
“Today, companies tend to focus on the latter instead of the former,” said Bravery, who gave the example of a financial services clients which is experiencing this issue.
“They have 20 high potential pools around the world, but are unable to fill 30 per cent of their critical roles internally,” she said.
It is useful to reflect on ‘build’ strategies (improving someone in role) versus ‘move’ strategies (getting a new player in role), and Bravery explained that build strategies tend to be lower risk, but also lower return, while move strategies are higher risk/higher return.
“Although this is often about a company’s risk appetite, it also shows insight into the breadth and quality of managers’ decision making,” she said.
Secondly, managers often have a restricted view of the levers they can pull, not just with regard to ‘build’ versus ‘move’ strategies, but in terms of the wide range of tactics available to motivate and drive performance.
“Holding managers accountable for talent outcomes helps to broaden their thinking, but sometimes managers are just not aware of how much flexibility they actually have with regard to job rotations, step-up opportunities, incentive strategies, etc,” she said.
“Therefore, they rely on tried and tested methods, despite variable success.”
The most popular techniques used for development across the region are often those that have the least impact in improving performance, according to research from Mercer, which has developed a “talent game” to help companies and their managers to make better strategic talent choices clearly aligned to business objectives.
“We are all strapped for time, but with talent being such a critical business asset, we cannot afford to invest time and effort in actions that have a low return,” she said.
“This also underplays the huge impact that people interventions can have on business performance.”
3 ways to make better talent decisions
There are three key, practical ways organisations can use scientific analysis to make objective talent decisions that align with business strategy, according to Bravery:
1. Identify critical roles based on strategy and intentionally ‘move’ or ‘develop’ talent into these roles. Successfully executing on strategy is about getting A players into A roles quicker than your competitors.
Therefore, focusing on critical roles in your talent reviews and getting the balance right between describing ‘current state’ and strategising ‘what next’ ensures talent decisions have business impact.
2. Be honest about potential. Organisations vary in sophistication in terms of how they measure potential. It is impossible to make successful, strategic decisions about talent if you only consider past performance when hiring, developing and moving talent.
Improving the assessment of potential and encouraging managers to take action to optimise their teams is one way to maintain a healthy talent pipeline aligned with current and future business needs.
3. Hold managers accountable for talent outcomes. Talent-fueled organisations value leaders who are active in hiring and developing talent.
Organisations that recognise and reward leaders for talent pipeline development are able to respond more quickly and nimbly to changes in market or customer demand.
