Realizing Talent Advantage: Evidence and Implications from the Organization Guidance System

by Dave Ulrich, Partner, The RBL Group, Rensis Likert Professor, Ross School of Business, University of Michigan ([email protected] ) and Harrison James , Consultant, The RBL Group ([email protected] )

We know it matters. Some go to war for it. Professional sports teams draft for it. Actors and musicians audition to show they have it. Others consider it the ultimate solution and try to manage it. It is often considered an organization’s most important asset. Agents contract for it. Some are innately endowed with it while others strive diligently to earn it. All try to grow it. Talent. It is evolving into a science for some HR professionals and a passion for many line managers. A multitude of programs and investments (attract, pay, engage, upgrade, and retain) have been made to turn people as employees into talent advantage for organizations.

In the Organization Guidance System (OGS) , talent is one of four human capability pathways (organization, leadership, and HR being the others ). Investments in talent may be linked to value created for all stakeholders (all the “humans” who engage with an organization):

1. Employee productivity and sentiment.
2. Executive ability to differentiate strategy.
3. Customer share.
4. Investor confidence in market value and financial performance.
5. Social citizenship or reputation in the community.

Talent Initiatives that Deliver Stakeholder Value

We have distilled ten (out of dozens) of the most common talent initiatives (figure 1) where investments can be made to deliver stakeholder value. Our criterion for narrowing is based on the insights from books, numerous podcasts, consulting reports, and research studies (see figure 2).

Note: Also, numerous talent articles, LinkedIn posts, podcasts, research reports, TED (and other) talks, best practice communities, and blogs are often summarized in monthly curations (e.g., David Green Data Driven Monthly ), weekly newsletters (e.g., Brian Heger, Talent Edge Weekly ), or daily research postings (e.g., Nicholas Behbahani ).

Global OGS Talent Results

Over the past four years, we have collected data from 187 firms (see update on OGS ) to determine how much they focus on each of the ten talent initiatives and the relative impact of those initiatives on the above five stakeholder outcomes (see heatmap in figure 3). ?

To interpret this heatmap about how investments in talent affect stakeholder outcomes, consider the following:

1. These results are based on information from 187 companies. These organizations are not a random or stratified sample of organizations, but they were picked based on organizations interested in learning more about how their investments in talent determine stakeholder outcomes and where to prioritize their talent investments. ?Building on previous data with only one respondent per organization, this report updates our work from four years ago .? We now require at least five respondents per company to avoid key informant bias.
2. The global mean and standard deviation indicate where companies have focused and what they have accomplished in each of the ten dimensions (1 talent acquisition and 9 track employee engagement are the highest: 7 retain best employees is the lowest). The standard deviation shows the variance? on each of the ten dimensions (9 track employee is high).
3. Each of the five columns are regressions (variance decomposition ) that indicate how each of the ten talent dimensions explain variance in performance on the five stakeholder outcomes. The colors represent high (green), medium (yellow), and low (red) impact of the ten talent initiatives for each stakeholder (beta weights in statistics). The R2 at the bottom of each column indicates that talent investments predict employee, strategy, and social citizenship results better than finance and customer results.
4. The message of the five stakeholders (columns): Different stakeholder results are impacted by different talent initiatives. Employee and strategy results are more impacted by talent acquisition (1), customer results by retaining employees (7) and employee experience (10), financial and investor results by careers (5), and social citizenship by developing employees (3).
5. The message of the talent initiatives (rows): No dominant talent initiative delivers all stakeholder outcomes (number of green cells by row). Nine of the ten talent initiatives have high impact on a stakeholder outcome.
6. Messages from specific cells: Many ideas and explanations are worth pursuing with specific cell results that deserve more attention beyond this overview. bb

Overall message: Realize talent advantage does not have a “one investment agenda.” No single talent initiative (row) will deliver the most value to all stakeholders (column). All talent initiatives impact at least some stakeholder value. Talent initiatives need to be tailored to the results they hope to deliver.?

Specific Company Results

While the global results in figure 3 indicate the overall relative impact of ten talent initiatives on stakeholder value, we have propose an opportunity assessment—or prioritization formula— that a specific organization can use to determine their specific talent advantage based on three dimensions: status, impact, differentiation (see figure 4).

For example, consider these two companies guidance reports on the talent pathway (figure 5) that were created using the opportunity formula.

In these opportunity heatmaps, the colors represent opportunity and where to prioritize to have the greatest impact. These specific heatmaps show that some general high-level similarities exist for Company A and B (e.g., each column has relatively the same opportunity impact as shown by the color scheme). However, the two companies have some differences, as seen by row. Reading by row, Company A will have higher human capability impact by investing in “managing employee performance” and Company B by “retaining the best employees” and “managing departing employees.” These specific heatmap results may help each company realize its unique talent advantage by allocating its talent initiative investments to better deliver the stakeholder value that matters to them specifically.

Implications for Realizing Talent Advantage

As noted in the beginning of this post, few doubt that it (talent) matters, and almost everyone has an opinion about where to invest in talent to gain an advantage. The OGS offers empirical evidence of the impact of talent investments on five stakeholder results for a global sample of organizations.

Even more, each organization can begin to rigorously assess where to prioritize talent investments to gain the results that matter most. Realizing talent advantage comes from making wise investments in talent initiatives will always require judgment, but the data from the Organization Guidance System can inform and improve that judgement. Once prioritized, the insights, tools, and actions for any one of the ten talent initiatives can be implemented to have impact.

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Dave Ulrich?is the Rensis Likert Professor at the Ross School of Business, University of Michigan, and a partner at The RBL Group , a consulting firm focused on helping organizations and leaders deliver value.