How to reboot talent management for the 'now of work'

We are living in exponential times. Globalization and the 24/7 ‘always on’ culture have huge implications for how we leverage and engage a dispersed workforce and integrate work and life. Disruptive technologies are powerful productivity drivers but we’re still learning how to work together in a new augmented reality. With shifting demographics, more generations are working side-by side and possess very different expectations and needs. Consequently, new work models are proliferating and we see the ‘rise of the freelancer’ and the gig economy changing the landscape of work, posing both opportunity and challenge for talent management. Incremental change, stable and predictable business environments are long gone and as a result, many of our traditional people practices are out of date and not creating the desired impact. Talent management is at a strategic inflection point and requires new approaches that keep pace with the changing needs of the business and accelerates performance.

Talent management covers a broad set of HR practices to attract, identify, develop, deploy and retain colleagues, often accompanied by some variation of the tagline: ‘right people, in the right roles, with the right skills and at the right time’. Heads of Talent Management will have a different scope of work from company to company, depending on the organization’s HR operating model and how it has been defined. For example, it may or may not include talent acquisition or learning and development. Regardless of how the role is defined, what's most important for optimal results is that these activities are integrated across the HR function and designed with colleague experience front and center. Unfortunately, this is often not the case resulting in low impact, fragmented talent management activity and teams working in silos.

This article homes in on two fundamental areas of talent management; talent identification (or assessment) and talent planning (includes mobility and succession) and brings fresh perspectives from research and practice to help you discover and mobilize the talent in your company. It’s a summary of a session I ran at the ATD Middle east conference 2020: Talent Management: A new paradigm.

Talent management is at a strategic inflection point and requires new approaches that keep pace with the changing needs of the business and accelerates performance

What are the biggest pitfalls of talent management in business today?

• ‘Talent’ is poorly defined with no unifying framework A perennial issue in talent management is the lack of a clearly defined and consistently applied purpose and definition for talent, within and across organizations. The terms ‘Talent’ or ‘high potentials’ aka ‘HIPOs’ are often used interchangeably but can mean starkly different things, for example, in one company all colleagues may be considered ‘talent’ but in others the term is reserved for the top 5-20% with performance and potential as leading indicators. As a concept, it is multifaceted, complex and challenging. Exactly how ‘talent’ or ‘potential’ is defined and what we mean by it depends on the unique context and purpose within each organization. Karaevli and Hall reviewed 13 major organizations including Boeing, Chase Manhattan, Dell, Eli Lilly, Hewlett Packard, Southwest Airlines, and Sun Microsystems, none had the same definition of potential. This has led to a proliferation of different models and tools promoted by consultancies to measure an equally vast array of constructs.
• It’s elitist and binary – The traditional model of talent management is inherently exclusive and based on the power-law performance distribution which implies that 80% of an organization’s value is derived from 20% of its colleagues (the HIPOs), consequently companies skew investment to this population. While there is merit in this talent-to-value approach, questions inevitably arise about the rest of the organization. There are huge risks in focusing on the few as opposed to the many or the haves and the have-nots, with real loss in terms of failing to nurture all talent to meet the challenges. Exclusive talent management creates division among colleagues and could disengage up to 80% of your people who are not considered to be high potential, this disengaged group has been referred to as ‘po-po’ (no not the police) it stands for passed over and pissed off! Secondly, the outcomes of talent assessment are usually treated as binary, you are either talent or you are not, which fails to appreciate the fluid and contextual nature of talent.
• Unreliable data hampers diversity efforts – Talent management practices habitually over-rely on a manager’s assessment of potential. The corporate research forum surveyed top global companies and found that 73% of these businesses primarily use a single manager rating or nomination for high potential talent. This is concerning. When we (humans) assess people, our evaluations are subjective and influenced by many other factors, this can happen consciously (political factors) or subconsciously (known as unconscious bias) and raises questions over the accuracy and effectiveness of our talent decisions. According to a recent report by Gartner, 88% of diversity and inclusion leaders identified “promotions and/or succession” as one of the talent processes most susceptible to bias.
• The wrong people are selected into ‘HIPO’ programs - Unreliable data leads to another pain point, high potential programs are not giving us the returns we hoped for. A 2019 HIPO benchmarking report shows 77% of companies don’t yield any ROI at all! One explanation for this, the reason why someone gets a place on the program in the first place often has little to do with whether they exhibit high potential and more to do with a manager’s desire to retain them, to reward them or to address a development need.
• Confusion between performance and potential - We ask managers to differentiate between top performers and high potential. They often struggle to do that well despite best efforts (or not!) to clearly define criteria and invest in manager training. How often is a ‘superstar’ (e.g. salesperson/engineer) with stellar performance month on month promoted to lead a team with disastrous outcomes? This happens when performance is confused with potential and it happens a lot.
• Failing to keep pace in an ever-changing context – Talent reviews are traditionally done once a year, but as we have seen with the revolution of performance management practices, an annual cadence neither reflects the dynamic business environment nor the fluid and contextual nature of talent. For example, the 9-box model is a popular talent management framework used in talent reviews to classify talent and determine career opportunities accordingly. The grid, which comprises a performance axis and a potential axis, includes subjective manager ratings (inaccurate data), takes significant time to complete and is seldom used by the business to actively and continuously manage talent in practice. This is because by the time it’s complete, things have changed, people have moved on and in many cases the grid becomes the outcome rather than a tool to drive outcomes. This hurts the credibility and impact of talent management activities. As the pace of change ramps up in business, accelerated by new technologies, existing roles change or become obsolete and we are less clear on what future roles and operating models are needed. One report published by Dell Technologies and the Institute For The Future (IFTF) estimates that 85% of the jobs that will exist in 2030 haven't even been invented yet. Which questions the need to invest time planning successors for roles that exist today with a long-term development horizon.

As the pace of change ramps up in business, accelerated by new technologies, existing roles change or become obsolete and we are less clear on what future roles and operating models are needed

What can we learn from research and practice about better talent management?

1.    Define and align on what talent means in your context

Get clarity on your definition of talent or potential and what is means in your context. For example, potential is associated with future possibilities rather than current performance. Is potential made up of common elements that are useful in all situations or do the elements of potential vary for different long term roles or objectives? Some organizations use the term generically, they identify and measure it independent of context whereas others have more segmented talent pools and while they believe there are common characteristics or abilities that predict potential in general, there are also more unique abilities and characteristics that differentially predict potential for each talent pool and career path. In these cases, they answer the question ‘talent/potential for what?’.

2.   Use objective measures of assessment

Using objective, robust tools to measure and identify talent is essential to mitigate biased manager ratings and reveal suppressed or hidden talent in the organization. There is no ‘silver bullet’ and as mentioned, there is a plethora of models and frameworks available in the market with supporting assessment tools. These models measure anywhere from 3 to 15 factors. While there is no unifying framework, a broad set of individual qualities (characteristics, motivation, skills, abilities and experiences) have been found to predict future performance in more senior or different roles. These include, cognitive ability, personality variables such as emotional intelligence and resilience, learning agility and adaptability, motivation constructs such as aspiration, drive and engagement. Contextual factors or qualifiers to consider include, career stage, prior experience, mobility and culture alignment. To reiterate, it is complex and multifaceted, so be sure to partner with experts in the field of industrial organizational (I/O) psychology on your assessment approach and work with them over time to validate that the framework and tools you use are actually predicting future performance in your business context.

Also worth noting, predictive validity (predicting future job performance) known as the decision-to-performance correlation is highest when multiple assessment measures are used over one. Assessment centers which blend business simulations, situational judgment tests and psychometrics are used by leading companies for talent assessment and development purposes. Unsurprisingly, we are seeing a shift from face-to-face assessments to varying degrees of virtual assessments which range from fully virtual simulations to asynchronous virtual assessments and offer organizations a virtual, robust talent assessment solution. According to Mercer’s internal research, virtual assessments have been shown to yield even stronger decision-to-performance associations than face to face centres.

3.   Think of performance as a gateway to potential

The 9-box model as noted above it is fraught with issues in practice. Often performance and potential are confused (you end up with a one dimensional framework based on current performance) and the assessment of each axis is manager-rating dependent. Some companies are departing from the traditional 9-box approach in favor of other variations (e.g. a 4-box) and others are losing it altogether. PepsiCo describe how they use performance as a gateway to potential, they say ‘performance gets you in the game but it’s certainly not the leading indicator of someone’s ability to take on bigger more complex roles’. This approach allows you to first determine if someone is performing or not, then if they are performing, you move on to assess potential in a more robust way as opposed to mixing these two dimensions in one model.

4.   Simplify and streamline

Simplification is a crucial guiding principle for driving agility within talent management and the wider business. This means integrating adjacent processes or developing a dual cadence for talent reviews. BP, for example have streamlined their talent review, calibration and succession planning process and now only conduct a full review every second year. Others have chosen to initiate talent reviews only when triggered by business disruption, rather than following an annual cadence. Many are making strides to simplify definitions and criteria, adopting less cumbersome frameworks with only a few leading constructs. Western Union runs ‘talking talent’ sessions with clusters of 10-12 managers getting together for one hour a month to talk about the people in their team and the opportunities they have coming up. These more frequent, less formal touch points focus on the conversation over the process and keep pace with changes in the business.

5.    Drive leadership accountability

While we don’t want to depend on subjective leader ratings for talent assessment, we absolutely want full accountability from leaders for driving the talent agenda in their teams. Organizations are increasingly focusing on the talent mindset of leaders. Microsoft CEO holds his leaders highly accountable and dedicates one week a year to have in-depth leadership 1:1s focused on the talent in their business domain, followed by group talent reviews. Other companies have set clear expectations of leaders in terms of the percentage of their time that should be allocated for developing talent. A recent Kornferry report found that 66% of the most admired companies incentivized senior execs to build human capital compared with only 30% of peer companies.

6.   Adopt more inclusive talent management practices

There has been a shift in how we think about talent, how we talk about talent and how we develop talent in recent years and one of these shifts is to focus on the many to create more meaningful work for more people rather than an exclusive focus on a few. This inclusive approach to talent management considers all colleagues as talent and is based on the notion that it is systems and interactions of people that create real long-term sustainable competitiveness. In most cases a hybrid model makes good sense, with some pools identified as more critical or specialized than others and a path with opportunities for everyone to reach their potential, while recognizing that some will have a steeper or faster trajectory than others. For example, the UK National Health Service (NHS) strongly believe that everyone benefits from the talent journey and are talented, their strategy includes the idea that managers drive the journey with the individual. The NHS does focus on leadership and diversity as an exclusive element but with the whole organization included. It is essentially a hybrid approach firmly rooted in the context of the NHS, its values and challenges. A private sector example, Nestle, has recently shifted their narrative from ‘Who is ready to step up?’ to ‘Everyone is ready to do something different. How can we help them?’.

These subtle changes to the language that we use, as represented by Nestle, can be powerful. Consider losing labels that have personal and evaluative connotations, who wants to be told that they have ‘low potential’? In practice, we see companies taking a more individualistic approach to understand unique skills, talents and aspirations of their people rather than labeling them or putting them in a box. This more person centric approach connects seamlessly with the D&I agenda. There is a case (resources are finite) to want to skew investment to the group that will give you the greatest returns, but it’s important to be cognizant of the consequences and implications of this approach and base these decisions on robust assessment. Are you sure you’re identifying the right talent in the first place? Remember people are often given the high potential/talent label by their manager for reward, retention or remedial purposes. Ask yourself, what will the impact be on the wider and larger population who don’t get this opportunity and how would that impact on the business and culture? There is no one right way. Start at a philosophical level, define your guiding principles for how you think about talent, aligned with your company values (co-create with colleagues and the exec team). This will serve as the foundation for your approach to talent management and guide subsequent decisions.

...one of these shifts is to focus on the many to create more meaningful work for more people rather than an exclusive focus on a few

7.    Succession plan for capabilities over roles

During times of crisis, leadership turnover is high. Those who have not invested in succession planning or have relied on anecdotal data will be falling short of the bench required to step up during tumultuous times. Going forwards, in a world where we don’t have a clear line of sight on what the future roles may be, planning for capabilities makes a lot of sense. Accenture’s 2017 report predicts that “Seventy-nine percent of executives agreed that the future of work will be based more on specific projects than roles”. Rather than focus solely on preparing specific people for specific roles, leading companies are looking to build leadership capabilities within clusters of their workforce. These capabilities are based on the future needs of the organization’s strategy and their market. With a seat at the table for scenario planning and business strategy formulation, talent management leaders anticipate the capabilities needed for future success and incorporate their deep understanding of the existing skills landscape to plan for the future. These skill-based plans will complement role-based plans to accommodate unforeseen and sudden gaps.

8.   Drive agility through a talent marketplace

Traditional career management models of the past, took a planned approach to mobilize talent, very much linked to career pathways, annual development planning and vertical moves. More dynamic talent mobility is commonplace today characterized by boundary moves, stretch assignments and project work. However, these moves are often driven by ‘who you know’ and how visible you are, which can disengage your people and won’t yield the best business outcomes. Progressive corporations are now leveraging the latest HR tech to create an internal talent marketplace which enables truly agile talent mobility to meet individual and business needs. These three talent mobility models have been described by industry influencer and thought leader Josh Bersin as: 'planned' 'facilitated' and 'agile'

Crucially, talent marketplace systems possess the dynamic features needed to adapt as jobs evolve and emerge. However, a transition to an internal talent marketplace is not only about the system, it requires the right mindset and culture to ensure success. Schneider electric for example, born out of the frustration of seeing colleagues exit the company citing ‘lack of opportunity’, encourage their colleagues to build Linkedin-style profiles on the system and use artificial intelligence to match the right people with the right skills to the most pressing projects and roles. Siemens also have their own in-house talent marketplace and a ‘job tagging’ system which allows colleagues to tag jobs which they are interested in for the future. This offers a far more agile approach to succession planning, and provides the manager with a direct link to a future pipeline of internal talent. These approaches focus more on experiences and skills than careers and allow colleagues to reinvent themselves and try new things. Describing the opportunities for HR marketplace technology Josh Bersin says,

“ (talent marketplace tech) helps people find the best possible work for the skills they have and the skills they want”

Perhaps the real paradigm shift for talent management is in expanding the talent marketplace to cross organizational boundaries, including partners, vendors and networks. This is in a nascent stage but some companies are experimenting with talent consortiums that extend beyond their company. The British Army follow one such model where they develop skills by placing officers in positions with partner organizations. Claus & Monaghan (2019) call this ‘dynamic open talent’ and it is in direct contrast with the static and closed talent approach suited to predictable and stable workplaces of the past. The paradigm shift to agile talent management using marketplace technology has roots in career development theory; the boundaryless career and protean careers. A boundaryless career focuses on equalizing the power relationship between the manager and talent by letting people move more freely within the organization, while a protean career focuses on a personally meaningful and purposeful career. Data from a McKinsey report  adds weight to the business case for agile talent management: “The link between rapid (talent) allocation and effective talent management is also strong: nearly two-thirds of the fast allocators say their talent-management efforts have improved overall performance, compared with just 29 percent of their slower-moving peers.”

Conclusion

Talent management is key to organizational success “at companies with very effective talent management, respondents are six times more likely than those with very ineffective talent management to report higher total returns to shareholders than competitors.” McKisney. Getting it right is no mean feat. Disrupting rigid talent management processes of old is going to be key to adapting to meet ever changing business needs. Ultimately though, effective talent management goes way beyond the bottom line and done well, creates a purpose aligned, inspiring culture where all colleagues have a richer work experience and reach their full potential. 

Peter Cappelli, the director of HR for The Wharton School sums it up well:

“The talent problems of employers, employees, and the broader society are intertwined. Employers want the skills they need when they need them, delivered in a manner they can afford. Employees want prospects for advancement and control over their careers.”

By Hannah Matta CPsychol

A chartered business psychologist and coach, and former Senior Director of Global Talent, Learning & Culture at Careem (an Uber company). Hannah is passionate about building high performing and inclusive cultures through progressive people practices, with international experience spanning sectors from local government transformations to fortune 100 companies and high growth startups.