How should I approach ongoing talent management?
CEOs are paying attention to talent these days for two main reasons. First, over the past several decades, industry has been successful in wringing out many of the wrinkles in bringing products and services to market. Production efficiency and supply chain management combined with globalization has increased competition and reduced margins for most products and many services. The result is that products and processes that were once points of differentiation are now often indistinguishable from supplier to supplier. Even the most advanced products quickly become commodities today unless they offer a design or creative appeal beyond their practical purpose or functionality. Today, constant re-invention, innovation, design creativity and marketing prowess (through human talent) is the key sustainable advantage for knowledge economy organizations.
Investors and shareholders constitute the second driver. They too have become aware of the importance of hiring and keeping top performers and of maintaining solid succession plans for leaders and those in other critical positions. Tighter governance rules in many countries mean that boards of directors and CEOs are held responsible for their decisions affecting the health and sustainability of the firm (much of which today rests on the quality and depth of its talent). Succession and workforce planning, especially, are areas in which leaders must focus due diligence.
For HR leaders, this is very good news. All twenty CEOs referenced in EIU/DDI study believe that HR should be responsible for “executing talent management strategy, being custodians of the talent management process and [providing] guidance and fresh thinking about talent management programs.” Nineteen of twenty said that their head of HR is part of their “inner circle” of executives, a key person they rely on to help differentiate the firm on the basis of superior workforce strategy.
This is a new and welcome development. After decades of hard work from the fields of personnel and Human Resources, most organizations can now rely on and take for granted efficient and effective processes for payroll and benefits administration. However, HR has been a victim of its own success in creating repeatable, dependable administrative processes. Today, most firms outsource payroll and benefits administration and a growing number are opting to outsource HR in its entirety. To the extent that HR has succeeded in administration, it has generally failed thus far at “strategy”. Now that CEOs are demanding workforce strategies, including innovative ways to compete - for and through - superior talent, the pressure is on HR leaders to perform like their finance, IT, marketing and operations counterparts, who, unlike HR, have for years aligned and integrated their work with the highest corporate goals and objectives.
The opportunity for HR leaders is tremendous. This is a golden opportunity for HR to move up the organizational and professional ladder. At the same time, it is a chance to re-brand the profession. For those involved in managing talent for competitive advantage, new titles and categories are vital. We should begin seeing more ‘C' level human capital and talent management professionals heading highly skilled, business focused teams in the coming years – categories that began emerging in the late 90's when the primacy of talent in organizations became widely understood for the first time. HR leaders should start this process by first gaining a solid understanding of their organization's business and then aligning their talent management initiatives toward achieving those goals.
Throughout the developed world and across large parts of the developing world, the most important ingredient in our economies is, by far, skilled workers. Right now, we might be forgiven to think it is oil or another commodity. In fact, there is enough oil in Alberta , Canada alone to supply North American and European demand for the next 75 years. The problem is Alberta is short at least 100,000 of the skilled and semi-skilled workers it needs to extract that oil – despite offering some of the highest wages and lowest taxes in North America. 2
The demand for talent has reached pandemic levels across much of the world. Yet, there is and will be no shortage of people. Worldwide, population growth is nearly as steep as it has ever been. According to the United Nation's mid-range projections, the world will support over 9 billion people by 2050. 3 There is an obvious but important distinction between the thin layer of talent worldwide that can contribute to our increasingly global economy and “labour”. The distinction is often lost when we talk about across the board labour shortages and general demographics.
To illustrate, consider knowledge workers (commonly defined as those with bachelor's degrees or better) in the United States . Today, unemployment among this group is around 2% 4 , meaning essentially that anyone who wants a job can get one. Even during the last US recession, roughly between 2001-2005, unemployment in this group never went above 4% which is the rate economists consider full employment.
The global talent market is already tight and getting tighter. All the while, we unrelentingly raise the bar for talent. As economies, business, social problems, science, and health & security issues become more complex, and as our knowledge and information society becomes more globally integrated and sophisticated, ever greater skills and knowledge are required. Without a doubt, organizations that can develop, attract, mobilize and retain talent will be the winners of the future.
Organizations will thrive or stagnate in the 21st Century based on the depth and quality of their talent. Due in part to globalization, we are in the most competitive economic environment in history. The talent that will drive the future for a company – create new ideas, even whole new industries; the next Microsoft, Ikea, Dell, Google or TATA – will be conceived and built by exceptionally creative people.
The modern HR executive is aware of these issues and understands the need to expertly brand their organization to appeal to the talent it requires. Moreover, they are aware that “talent management” is no longer a one to many exercise, that there is no one-size benefit program, for example, that fits all. Recruitment, development, performance management and retention will increasingly be ongoing, one-to-one activities, highly differentiated for the greatest possible impact.
Thus, traditional “HR”, most often characterized by generic programs is quickly giving way to the more sophisticated methods of talent management. In order for this to succeed, however, talent management executives must enlist the support and active involvement of managers and leaders from all parts of the business.