Make Your Company a Talent Factory

Key ideas from the Harvard Business Review article by Douglas A. Ready, Jay A. Conger

An astonishing number of companies are struggling to fill key positions. This talent shortage is putting an enormous strain on their potential to expand into new markets. One real estate development firm recently had to pass on a 500 million major reconstruction job after realizing it hadn't groomed anyone capable of leading the project.

Talent shortages have two causes: Companies' talent development strategies are out of sync with their strategic goals. And senior executives lack a deep-seated commitment to talent management.

To create a free-flowing pipeline of current and future leaders, Ready and Conger recommend marrying "functionality" (rigorous talent processes that support your company's strategic objectives) with "vitality" (a passion for talent cultivation among executives). At Procter & Gamble, for example, the CEO and senior team personally teach all the leadership development courses for the company's top 300 executives.

The Idea in Practice

Building Functionality
Ready and Conger recommend these processes to help you put the right people with the right skills in the right place at the right time:

Help people understand your strategic objectives. For example, financial services giant HSBC holds conferences to educate employees about the firm's strategy for increasing cross-unit collaboration and to highlight collaborative initiatives. At one conference, some general managers explained how they transferred a client from the commercial banking unit to the private banking unit. Previously, the first unit to "own" that client wouldn't have shared him with other units, because the original unit wanted to still be associated with that client's revenues. After each conference, participants are asked to commit to doing one or two things differently to strengthen the firm's collaborative capabilities.

Groom people for complex, challenging jobs. Consumer products company P&G's growth strategy hinges on winning in emerging markets. To help high-potential employees advance, the company moves them through a portfolio of senior-level jobs categorized according to strategic challenges, size of the business, and complexity of the market. First-time general managers might initially take a relatively small country-manager position and then be placed in charge of larger countries and, later, of regions.

Fostering Vitality

To foster vitality:
Build commitment to talent development. P&G hires 90% of its entry-level managers straight from universities and grows their careers over time. It also sponsors a college intern program that offers participants chances to assume real responsibility by working on important projects. The company takes on former interns as full-time employees at a percentage well above that of most competitors, modeling commitment to talent development.

Encourage engagement. HSBC requires each unit to have a talent implementation strategy. These plans explicitly link a unit's growth objectives to its people development activities. The corporate head of talent works closely with each unit to develop its proposed strategy and presents the aggregated plans to the group head office, highlighting any talent gaps that could threaten the firm's growth objectives. This process keeps talent management high on the agendas of line and corporate leaders, and prevents them from getting distracted by seemingly more pressing problems.

Ensure accountability. Hold all managers and executives accountable for doing their part to make talent processes work. P&G's CEO A.G. Lafley claims ownership of career planning for all the general managers, vice presidents, and talent pools involved in the company's top 16 markets, customers, and brands.


Copyright 2007 Harvard Business School Publishing Corporation. All rights reserved.