Agility: The Next Talent Management Imperative

Competent businesses are adept at hiring and firing workers. Great businesses however are skilled at developing and deploying talent in ways that continuously grow their experience, stretch their abilities and enable their achievements. Creating work environments that promote people agility across jobs and organizational boundaries is the next imperative for companies seeking competitive advantage through their talent.

It is surprising how few companies develop and move their talent around the organization. They know how to recruit stars, fire failures and replace leavers – but few seem to know how to provide one of the most important factors in retaining talent – opportunities to achieve, move and grow – within the company. Ever hire a star only to see them leave in frustration 9-18 months later because they felt stuck? Or experience shock when an outstanding performer leaves your company after 5 years because they were ‘too valuable’ in their current job to be allowed to move to a different position or department? So instead, they moved to a different company.

There are many organizational and cultural reasons why companies constrain talent. Performance obsessed managers are often reluctant to give up the people resources they feel are needed to achieve ever more challengingly goals and performance objectives. This short sighted behavior is reinforced by management and incentive systems that reward business results but not development of people.

HR and line managers often lack the tools and information to understand and manage the supply and demand of people and skills dynamically. Thus they are likely to be slow and reactive in responding to shifts in skill requirements and opportunities to grow new competencies. They may also be prone to rely on traditional hiring and firing processes as a means of matching skills demand and supply rather than more complex retraining and redeployment of existing resources.

Some leading edge companies however are beginning to tackle the talent agility challenge. For example, in “Cisco Systems: Developing a Human Capital Strategy”, California Management Review, Winter 2005, http://www.haas.berkeley.edu/News/cmr/contents.html, Jennifer Chatman, Charles O’Reilly and Victoria Chang describe how this Silicon Valley legend has refocused its approach to talent from external acquisition to internal development and deployment.

For years Cisco was the poster child for how to identify, attract and hire talent. But beneath the surface, it was buying talent through acquisition and keeping it through high-priced equity stakes distributed to employees. Not much talent management acumen was required. But when the company’s marketplace and stock price tanked, Cisco had to learn a different set of skills for attracting and keeping talent. It also realized that it needed to better utilize the talent it already had.

According to CEO John Chambers, “We made progress in developing employees, but in our industry, I want the majority of us not to be in the same job – or even the same function – three to five years from now. I want us to create an environment of continuous learning and challenge, that will allow us to move from one business unit to another in engineering, or from sales to customer advocacy, or from financial to IT.”

Companies like Cisco that compete in dynamic industries, where technologies, products and markets are in a continuous state of change must learn how to develop and redeploy their talent in an agile manner. The company recast its Pathfinder software application originally developed to support external recruiting and used it to create an internal job matching system. Pathfinder’s corresponding online database, I-Profiler, allows employees to voluntarily enter their resumes for consideration. The profiles capture employees’ work and educational experience, skills, and technical qualifications and detail their career aspirations for development discussions with their managers. Line managers have access to each of their employees’ profiles to assess existing skills on their teams.

But these moves represented only part of the solution. The company also chartered Cisco University to lead a company-wide cross-functional effort to create a ‘development culture’ within the organization. The university does not operate as a centralized place to go for learning, but as a set of distributed capabilities for everyone to tap across the organization. This learning and development capability is built upon the ‘3E Model’:

• Experience through assignments, on-the-job learning, and traditional learning

• Exposure developed through on-line learning, mentoring, shadowing, periodic forums and talent reviews

• Education through a series of customized and focused programs that include significant teaching and involvement of senior Cisco executives as well as outside faculty

The impetus for shifting Cisco’s talent management strategy came from the top of the organization. John Chambers asked in a company meeting prior to starting these initiatives, “How many people think we are good at moving resources (people) and retraining? (No hands were raised). It’s not even in our vocabulary. But we’ve got to get dramatically better at moving resources around the company. Our top leadership….I keep moving them around. We’ve got to learn how to retrain people effectively as a part of our culture, to keep up with the market transitions.” This is good advice for any company.

How good is your organization at moving and retraining staff to anticipate and respond to changes in your business? Not very good you say? If so, it’s time for a change. Because companies that find ways to grow and move their talent within their organizational boundaries will not only substantially reduce recruiting and termination costs but will better attract and keep top talent as well. Indeed, those companies that can master talent agility will have a leg up on their competition in both the quality of their people and their performance.

Four Steps To Making Talent Management A Core Competence

According to a study reported in the June 2005 issue of the Harvard Business Review, ‘people-driven’ businesses are now predominant. But many companies, even in people businesses, don’t yet have the talent management processes they need to excel. While organizations have perfected sophisticated techniques for managing capital investments, suppliers and the production and flow of goods and services, their capabilities in managing people seriously lag.

In their article, “The Surprising Economics of a ‘People Business’”, (available for purchase at http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0506D), consultants Felix Barber and Rainer Streck argue that people are now the most significant cost in many industries when compared to spending on capital, R&D and suppliers. In industries like advertising, IT services, financial and brokerage, engineering, telecommunications and health care, personnel represents the largest component of total spending (40%-70%). These are what the authors refer to as people businesses. They have high overall employee costs, a high ratio of employee costs to capital costs and limited spending on activities like R&D.

Another category they identify is ‘people-oriented’ businesses. These are companies where spending on personnel, while not the largest component of total spending, is nonetheless significant because it exceeds capital costs. Companies in this category include software firms, airlines, restaurants, pharmaceutical and chemical companies, consumer goods and automotive. Only industries like utilities and oil spend more on capital costs than on people.

The authors assert that in people and people-intensive businesses, the performance of talent drives the overall performance of the company. And the distinct economics of people-driven businesses call not only for different business performance measures but also different management practices. In these businesses, where even “the slightest changes in employee productivity have a significant impact on shareholder returns, ‘human resource management’ is no longer a support function, but a core process for line managers.”

I agree with these assertions but would go one step further to say that in people-driven businesses talent management must be a core competence for the entire business. Not only should line managers be adept at managing people but the corporation needs to have a robust people management capability that is clear, coherent, and applied company wide.

Many companies are only beginning to appreciate the importance of enterprise wide talent management. For example, I recently spoke with an HR executive in a large services organization who indicated that her firm was finally waking up to the importance of managing their talent in an integrated fashion across the enterprise. The company realized it was losing tens of millions of dollars a year in unnecessary recruitment and termination costs and lost productivity. Its approach to recruitment was fragmented and not connected to other key talent management activities. It did not have an enterprise view of vacancies and surplus people across the organisation. Development and deployment of people were separate and non-integrated activities. Lastly, there was no organizational focal point to oversee the process.

The result was that for several years hundreds of people were laid off in one part of the business while hundreds of others, often with similar skills to those departing the organization, were hired in other parts of the company.

Regrettably, this situation is not unusual in many organizations today. Indeed, many companies are missing substantial opportunities to save costs and improve performance by upgrading their talent management capabilities. There are four steps that companies can take to quickly assess their talent management process and begin improving their talent management competency:

Step 1 – Identify Key Roles. Analyze the key steps in each part of the talent life cycle (identification and attraction, hiring and inculcation, motivation and development, appraisal and reward, building and sustaining relationships) and map the key players and their roles and responsibilities to each stage. Are there gaps in responsibilities – key activities that no one is directly accountable for? Are there overlapping responsibilities – multiple people responsible for the same activity? Are the right people in the right roles? Are line managers provided with consistent and effective processes, guidelines and tools for managing talent?

Step 2 – Take an Inventory of Your Talent Management Skills. Identify the critical skills needed to play the key roles in the talent life cycle effectively. To what extent does your company employ people who possess them? What might you do to improve or develop them? What are you doing in-house that might be better outsourced? What have you outsourced that you should be doing in-house?

Step 3 – Measure the Right Things. Assess the measures you use to evaluate the performance of your talent management process at each life cycle stage such as offer-to-hire ratios, average tenures of new hires, performance ranking, skill fit to job requirements, etc. What data are you capturing and reporting? Does it feed directly into a enterprise talent scorecard? How do these measures align with your overall talent management strategy?

Step 4 – Set Up a Process-Wide Feedback Loop. Everyone managing talent needs to understand the big picture and to connect their role and responsibilities to the overall objectives of the process. How is data captured in each stage of the life cycle reported and communicated? How are knowledge and experiences shared across the process? Where are the information gaps and missed communications? How much feedback is formally captured and communicated versus informally discussed among staff? What key actions might you take to improve your feedback mechanisms?

With so much of the costs and performance of a business now dependent on people, isn’t it time managing them became a core competency of your organization?