Designing Talent Management - Top MBA School/.../unc...designing-talent-management.pdf · Designing...
Transcript of Designing Talent Management - Top MBA School/.../unc...designing-talent-management.pdf · Designing...
By: Chris Miller
Program Director
UNC Executive Development
All Content © UNC Executive Development 2015
Website: www.execdev.unc.edu |Phone: 1.800.862.3932 |Email: [email protected]
Designing Talent Management
to Meet an Organization’s
Strategic Needs
Designing Talent Management to Meet an Organization’s Strategic Needs
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Introduction
ill Smith is an HR professional at a quickly growing shoe company, Sandalias. The
founders started the company 10 years ago, and after several years of incubation and
hard work, their market is expanding quickly. While some sales are online, most sales come
from brick-and-mortar stores. Innovative design, great marketing, and an excellent customer
experience have gotten the company to this point.
On a recent Monday morning, Smith received a call from the head of marketing. Some social
media attention the company received prompted a competitor to poach Sandalias’ best
marketer. The head of marketing needs a replacement ASAP. Smith makes a note to talk to
recruiting and heads to the break room for some coffee.
While in the break room, she runs into Steve Palmer, vice president of manufacturing.
Palmer tells Smith that he is worried because his two best managers are nearing retirement
age, and he doesn’t feel comfortable with any of their direct reports ability to replace them.
Returning to her desk, Smith catches up on her emails. She finds a message from a district
manager that says (in all caps) that her region needs three new managers pronto. Smith
cringes at the message. Sandalias will be opening five new stores this year, and only two
assistant managers are ready to assume a manager role, and lately, managers recruited
from outside Sandalias haven’t worked out too well. Smith has raised the idea of a more
systematic approach to talent management in the past, but the founders thought they knew
who the players were in the company, and managers were wary that new, more centralized
programs would constrict their decision making. Smith needs a better way to make the
connection between the success of the company and the need for talent.
This white paper:
Explores why many business executives overlook or underestimate the value
of having a strategic talent management process in place in their
organizations;
Defines talent management and discusses why it makes sense for most
organizations to have a structured talent management program;
J
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Frames talent management as part of the natural forces within an
organization’s life cycle in a manner that will help HR and talent management
professionals understand if and when their organization is really ready for a
formal talent management strategy, and;
Identifies the business factors that support the creation of a formal talent
management process and discusses how HR and talent management
professionals can achieve senior leader buy-in for talent management by
proposing it through a narrative and in a business-relevant manner.
The Undervaluation of Talent
Management in Organizations ost business leaders pay little more than lip service when it comes to talent
management. A survey on talent management by Bersin by Deloitte found that only
one-third of employers in the United States said they had identified critical roles or talent
segments in their organizations based on business goals. Further, less than 10 percent of
respondents said they had reached a stage where talent management was part of their
annual business planning process and that talent management was “truly owned by business
leaders and line managers,” and only 7 percent of respondents said they had a strategic
talent management program in place (O’Leonard, 2010).
For many organizations, particularly those in a growth stage, the lack of a strategic talent
management program is costly. Organizations that have a strategic talent management
program in place generate more than twice the revenue per employee than those without
programs, have a 40 percent lower employee turnover rate, and have a 38 percent higher
level of employee engagement (Bersin, 2012).
There are any number of reasons why business leaders undervalue talent management. As
Edward Lawler noted in an article for Forbes, some business leaders believe their
organizations can survive without top talent. Other business leaders may acknowledge that
talent management is important, but not as important as other business functions like finance
or technology. Still other business leaders simply fail to see the link between talent and their
organization’s business strategy because their backgrounds are not in HR and talent
management (Lawler, 2014). As Lawler notes, it is the HR and talent management
professional’s responsibility to help business leaders see—and embrace—that link.
M
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Talent Management and Strategic Talent
Management Programs
alent management is an organization’s formal plan to optimize its talent pool. It is a set
of processes designed to attract, retain, develop, motivate, and deploy employees with
a goal to create a culture that will meet the organization’s current and future business
objectives (Freschi, 2015). In the recent past, talent management efforts were often focused
exclusively on employees with strategic value to an organization (for example, the C-suite
and high-potential employees). More recently, however, employers have realized that they
should broaden talent management to all organizational levels to develop a deeper talent
pool (Freschi, 2015). Deeper talent pools can help widen an organization’s leadership ladder
and can help channel talent into skill-specific jobs.
A talent management process is
part of strategic workforce
planning, and an exercise that
helps determine the future talent
requirements an organization will
need to meet its strategic
objectives. For most
organizations, strategic
workforce planning is vital
because it helps them anticipate
the changes that may take place
in their marketplaces and the
types of employees they will
need to manage those changes.
Organizations that have strategic
workplace plans are generally
more agile in assessing and
meeting change than their peers, giving them a competitive advantage (Miller, 2012).
T
Key Principles for Successful Talent
Management
In an extensive study, Stahl et al (2012) found that
effective talent management did not come by focusing on
activities like training and development, but rather by
adhering to six key principles:
1. Alignment with strategy
2. Internal consistency
3. Cultural embeddedness
4. Management involvement
5. Balance of global and local needs
6. Employer branding through differentiation
For more information about the study, see “Six
Principles of Effective Global Talent Management.”
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Strategic workforce planning is more than just good HR—it’s also good business. A Society
for Human Resource Management survey found that a formal talent management process
was the most important practice employers can engage in to improve workplace productivity.
The international business consultancy, The Hackett Group, found that organizations with
strong talent management programs were likely to see an 18 percent increase in their
bottom-line earnings as compared to organizations without talent management programs
(Teng, 2007). And a survey by Bersin by Deloitte found that organizations that practiced
strategic workforce planning had, on average, a 28 percent higher score in efficiency,
effectiveness, and business alignment of HR functions than their non-practicing competitors
(Miller, 2012)
With all this evidence, one could conclude that each and every company, no matter the size,
should have a talent management strategy. But these studies overlook a key point; the
companies surveyed were larger and more established than most, at least large enough to
house a separate HR function. Talent management becomes critical at certain times in an
organization’s growth and should be formalized when the time is right. To understand when
an organization should create a talent management strategy, it may be helpful to look at
talent management in context of an organization’s life cycle.
Organizational Life Cycles rganizational life cycles have been written about for more than 40 years. There are a
number of organizational life cycle models, but they share the same idea that, like
living organisms, organizations proceed through predictive stages of birth, growth, maturity,
renewal, decline, and death (Costanza and Fraser, 2008). These stages are developmental
and, for the most part, sequential. Organizational life cycles traditionally have been used to
help leaders understand how they must change their organization’s goals and strategies as
they move through each stage, and have been used to inform leaders about when more
formal processes are needed for assets such as logistics, finance, information technology,
finance, etc. They have not, however, been used to inform organizations about how to
leverage their greatest expense—their people.
There have been plenty of organizational life stage models proposed over the years, but one
that has stood the test of time was proposed by Larry Greiner in a widely cited Harvard
Business Review article published in 1972 (Greiner, 1998).
O
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Greiner identified five stages of organizational growth each characterized by evolution and
revolution:
Creativity
Direction
Delegation
Coordination
Collaboration
The Creativity Stage
The creativity stage (also often called the birth stage) is characterized by a focus on creating
a product or service and a market for that product or service. The organization’s prime
concern at this stage is to acquire the resources it needs to survive. The organization’s
founders are usually technically or entrepreneurially oriented, and as a result, formal
business practices are few and far between or nonexistent. Communication among
employees is infrequent and when it does occur, it is informal. These characteristics work at
this stage because there are not many employees and everyone is concentrated on a
common goal—to launch the product or service for which the company was formed and to
survive long enough to reach the next organizational life cycle stage. This stage is also
characterized by long work hours and minimal pay in exchange for stock in the company.
Eventually, however, the very traits that lead to success at this stage—creativity, innovation,
and informality—begin to cause problems as the organization grows. Eventually, as the
company adds employees, it becomes impossible to continue working in the informal way.
Processes must be put in place to manage finances and people. The founders, though,
started the company because they were entrepreneurial, innovative, and had a product or
service they believed in—not because they wanted the day-to-day managerial
responsibilities now thrust on them because of their success.
This leads to a crisis of leadership and causes the fledgling organization’s first revolution—
the admission that to continue to grow, the company has to find a leader who is a strong
business manager. It is this revolution that leads the organization into the next stage,
direction.
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The Direction Stage
If the company survives the revolution in the first phase and installs a leader with business
acumen, they will move into a period of sustained growth. Characteristics of this evolutionary
period include:
Establishing a functional organizational structure;
Specializing jobs;
Introducing formal accounting systems;
Adopting budgets and work standards, and;
Communicating more formally and impersonally as hierarchies are created.
These more formal functions help channel employees’ energy. This more directive approach,
though, eventually breaks down because employees start to feel restricted by the more
centralized hierarchy. A crisis of autonomy occurs among employees, unleashing another
organizational revolution in which managers must learn how to give lower-level employees
the ability to make decisions. This revolution leads to the next stage, delegation.
The Delegation Stage
Decentralization is key to this stage. In this evolutionary phase, responsibilities are
decentralized to allow managers to take on more responsibility. Bonuses are used to
motivate employees and senior leaders “manage by exception” based on reports they
receive from the field. Communication from the top is infrequent, but when it occurs, it is
formal. This stage allows the organization to grow by motivating lower-level managers.
The revolution in this stage happens when senior leaders begin to feel that they are losing
authority of their operations, leading to a crisis of control. To regain a sense of control,
additional formal systems are introduced that allow senior leaders to realize growth through
more efficient allocation of the organization’s resources. These additional formal systems,
however, add more layers of procedures that start to take precedence over problem solving.
This leads the organization into the next life cycle stage, coordination.
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The Coordination Stage
This stage is characterized by the implementation of even more formal systems that allow
better coordination among senior leaders. Where the last stage decentralized systems and
managers took a more hands-off approach, the coordination stage requires senior leaders to
accept more responsibility for the administration of the new, more formal systems. At this life
cycle stage:
Formal planning procedures are established;
More staff is hired to develop company-wide programs intended to control
line managers;
IT becomes a centralized function but daily operating decisions remain
decentralized, and;
Stock options and profit sharing plans are offered to increase employee
loyalty and retention.
These more formal systems help managers look beyond the needs of their individual units,
and they begin to learn to justify their decisions to senior managers.
The revolution at this stage occurs when lower-level managers and employees begin to feel
that these formal systems are overkill. A red-tape crisis occurs. The system has become too
bureaucratic and innovation is stifled. The organization, as Greiner notes, has become too
large and complex to be managed by the formal systems put in place. This leads to the next
stage, collaboration.
The Collaboration Stage
This stage tries to minimize the red-tape created in the coordination stage. This stage is
characterized by more spontaneity and innovation through the creation of teams. Employees
are taught how to minimize interpersonal conflict and differences through skillful
confrontation. Social control and self-discipline replace formal control, and problem solving is
done through unit and cross-functional teams. Rewards are geared toward teamwork rather
than individual accomplishments.
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Life Cycles and Talent Management hen Greiner proposed his life cycles in 1972, talent management as a strategy was
yet to be created. But thinking of talent management in terms of where an
organization is in its life cycle can help HR and talent management professionals determine
if, when, and what type of a talent management strategy would benefit their organizations.
Businesses in the creativity and direction phases are typically growing rapidly. In turn, the
complexity of the business begins to outstrip the ability of senior leaders to effectively
manage it. Just like the formalization of other organizational processes and systems Greiner
wrote about, the need for talent management is a direct result of this new business
complexity. Every organization will eventually need a talent management strategy, whether
formally or informally. As organizations grow, they hit a wall where there are not enough
leaders to manage the new business. They need new leaders to continue to grow and
evolve, but there are none in the pipeline because talent management has not been part of
the business strategy.
Most organizations neglect talent management through the delegation stage. The
formalization of the business processes during the direction stage (finance, logistics,
operations management) may have caused decision-making bottlenecks, and there is little
appetite for formal HR processes when delegation to regional and departmental leaders is
the more pressing need. It is this delegation, however, that allowed the organization to grow,
and by doing so, increased complexity to the point that a return to more centralized
coordination is needed.
The collaboration stage is typically the place where an organization is ready to accept the
strategic importance of talent management. At this stage, it becomes apparent to senior
leaders that some talented employees are being underutilized and that their skills would be
valuable in other areas. Senior leaders also realize at this stage that the focus on each unit’s
own needs has led to silos that have damaged the organization’s overall health.
Organizations with highly complex, uniquely-skilled positions can be stymied by talent issues
regardless of their size or speed of growth. When an organization is in the creative stage of
its life cycle, the founder and a few key employees may have the necessary technical skills
grow the business, but as the organization expands, those technical skills may need to be
added to or replaced. Larger, more mature organizations can also be affected by the loss of
W
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highly specialized people (for example, employees who manage their research and
development or employees with skills that the national market for employees with those skills
may number in the tens).
It is also important for HR professionals to recognize that for some organizations, the best
advice is, “if it ain’t broke, don’t fix it.” For organizations experiencing slow growth, with low
turnover and easily replaceable employee skills, a formal talent management process may
not be necessary. In those organizations, HR and talent management professionals should
keep close tabs on where the organization is in its life cycle, however, and be prepared to
propose a talent management strategy well before the organization is negatively impacted by
a talent scarcity.
Making the Talent Management Strategy
Pitch lthough a talent management
strategy may not have to be
implemented immediately in all
organizations, HR professionals
should have one in their back
pockets because organizational
change is inevitable. All
organizations that grow will move
from a relatively stable, evolutionary
stage into a revolutionary one, and
HR and talent management
professionals should use these
stages to frame a relevant business
case.
The challenge for HR and talent
management professionals is to
convince senior leaders of the value
and necessity of having a talent
management strategy. As Lawler
A Company Spotlight: Right Management
Management consulting
firm Right Management
has developed a talent
management strategy
that works well for them. The process starts annually in
July and begins with a review of their “strategic execution
framework.” The framework includes the organization’s
goals and initiatives identified in their three- year
strategic plan. As part of the review, senior leaders divide
business objectives into five main sections; revenue,
business development, profitability, thought leadership,
and organization and culture. From there, HR leaders can
analyze the implications of those business objectives on
talent management strategy and planning and
communicate those implications to the team. From there,
they can identify their “talent commitments” for the
year. Talent commitments may include communicating
with and engaging employees, developing and launching
new programs for high-potential employees, and
expanding the company’s succession plan.
Source: O’Leonard, 2010.
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pointed out in his Forbes article, most executives lack a human resource background and
often feel their organizations don’t need a formal talent management strategy or don’t realize
when the time has come.
To convince senior leaders about the value of a formal talent management process, HR and
talent management professionals should consider the following steps:
1. Create a narrative.
2. Create absolution.
3. Identify current and future business needs.
4. Find champions.
Create a Narrative
HR and talent management professionals should prepare to win executives over by creating
a narrative that offers talent management as a solution to the pain of a given revolutionary
cycle. Like Smith in the example on
the first page, HR is in a unique
position to capture business-relevant
stories related to talent across
multiple business units. In telling the
story, HR and talent management
professionals should weave together
the frustrations that keep the
business from achieving its goals into
an understandable story where talent
management is the tie that binds.
People make sense of their reality
through narratives, and HR
professionals who can describe
accurately the evolutionary phase the
company is in will have an advantage
when creating these stories.
Hallmarks of Future-Focused Talent
Management
All aspects of talent management—recruitment,
development, retention, and transition—are integrated
in advance of any need. Successful future-focused talent
management strategies:
1. Continuously monitor workforce demographics,
costs, and issues with an eye on the future.
2. Have clearly defined roles and competencies that
align with business objectives.
3. Include a process for effective recruitment and
onboarding and hire the right people for
knowledge, skills, experience, and cultural fit.
4. Include a strong focus on leadership development.
5. Have a strong succession plan.
Source: Leisy, n.d.
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Create Absolution
When creating the narrative, it is important that HR and talent management professionals
also offer absolution. The lack of a formal talent management process is not a poor reflection
on existing leaders. There may have been many piecemeal attempts at talent management
in the past, perhaps during an annual meeting where the organization’s top ten performers
were recognized. HR and talent management professionals should acknowledge past
attempts, but explain why those attempts are no longer sufficient. In fact, HR and talent
management professionals should point out that the need for a formal talent management
approach is a testament to senior leaders’ abilities to get the organization to this point of
complexity that a formal talent management process is part of the next phase of the
successful organization.
Identify Current and Future Business Needs
To convince senior leaders of the value of a talent management process in the organization,
HR and talent management professionals should be prepared to offer several examples of
failed initiatives or the loss of key employees that restricted growth. In addition, offer senior
leaders a glimpse into the amount of money the organization spends on its people compared
to other cost centers.
When identifying current and future needs, ask the following questions to HR, peers, and
senior leaders with talent management firmly in mind and share those answers with senior
leaders:
1. Where has our organization been?
2. Where is it now?
3. Where do the answers to these questions mean for where we are going?
(Greiner, 1998).
Other questions to ask when identifying current and future needs may include:
1. What are the growth strategies and services that will drive our future growth?
2. What competencies do we need to keep, develop, and/or acquire to meet this
growth?
3. How can we make our HR function more strategic, effective, and efficient to
support these growth initiatives? (Leisy, n.d.).
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The responses to these questions when asked across the organization, will help frame the
talent management strategy and create buy-in for the process.
Find Champions
There are powerful and influential people in every organization who “get it” and will support
the development of a talent management process. They realize that they can’t achieve their
goals without the right people in the right places. It is the job of HR and talent management
professionals to find those people and educate them about the benefits talent management
can bring. Talent management should not be sold as an HR process, but rather a business
practice facilitated by HR. HR can guide the process, but the knowledge of current talent and
many of the future solutions will come from managers.
In making the pitch, HR and talent management professionals should feel free to include HR
data that illustrates key points. The most powerful data, though, will be found in the sales
and production numbers of the leaders who cannot complete their goals because of a lack of
talent. The wise HR practitioner should not even pitch talent management to executives
themselves, but rather create a core set of enlightened operations managers to explain why
they need better talent to execute the company’s strategy.
Conclusion
ll organizations will need a formal talent management process at some point during
their life cycle. HR and talent management’s role in developing that process is to be
able to recognize when the time is right and to make the business case that a process needs
to be executed. HR and talent management professionals should be prepared to make the
case for talent management, achieve senior leader buy-in, and be ready to help link talent
management back to an organization’s bottom-line.
A
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About UNC Executive Development
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experiences from our faculty and staff, integrated with the knowledge our client partners
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We combine traditional with experiential and unique learning to ensure that all individuals
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Through action learning and business simulation activities, we challenge participants to think,
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Our Approach: The Partnership
Our team customizes each leadership program through a highly collaborative process that
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drives strong outcomes.
Our Approach: The Results
Our executive education programs are designed with results in mind, and we are focused on
successfully meeting our clients' business and academic expectations. Below are a few
examples of the results our client partners have achieved:
Leadership refocused with new
strategy and cohesive vision
Strategic plans created for the
global marketplace
Supply chains streamlined
Products redefined
New markets targeted
Cost-saving measures developed
Silos leveled
Teams aligned
Participants leave empowered to bring in new ideas, present different ways to grow business
and tackle challenges. The result is stronger individuals leading stronger teams and
organizations.
Contact Us
Website: www.execdev.unc.edu | Phone: 1.800.862.3932 | Email: [email protected]
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