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.
Showing posts with label Succession Planning. Show all posts
Showing posts with label Succession Planning. Show all posts
Saturday, November 3, 2007
Monday, June 25, 2007
The 21st-Century Talent Shortage
With baby boomers retiring and other companies luring away key talent, is your company ready to fill the talent void, or unprepared to deal with the shortage of talent to manage business operations and growth?
Succession planning is a boardroom topic discussed from time to time; however, almost all companies fail to set-up a program organizationally that can deal with forecasted labor shortages in the not too distant future.
Studies show only about 50 percent of companies has in place a succession plan framework. Those that do, generally have only a process that is aimed at the executive level. Over 90% of companies are insufficiently prepared to ensure critical management and customer-facing positions are filled to levels that safeguard revenue, service and their brand over the next decade.
Secession planning is like changing a tire on a moving car. Human Resource groups are caught up in principally a reactive function that includes a variety of activities – current staffing needs, recruiting and training employees, documenting performance, dealing with performance issues, ensuring company practices conform to various regulations, managing employee benefits and compensation, overseeing employee records and personnel policies. In tandem, front line management is over-involved day-to-day in meeting sales and earnings objectives while ensuring customer service levels and competitive innovation are greater than before. The byproduct of this present-day busyness is no solid strategic plan for long term talent acquisition in what will be the tightest labor market in US history.
How then, do you go about it? A starting point is to better document, analyze and discuss current talent management activities and benchmark this information against an assessment of future needs for talented people. 78 million baby boomers will begin retiring in the next few years, and will continue to do so through 2031 when they reach full eligibility, so any plan should be at least a 10-year plan.
A simple understanding your organization's future talent needs can be made—in raw numbers—by taking into consideration historic turnover statistics, a projection of the number of people currently in the organization likely retiring out, and the amount of new positions created through planned expansion.
Then, organize the performance review process to obtain accurate data regarding existing talent—this process must include measurements of individuals’ performance, as well as indicators of potential and readiness objectively. Using only a few performance indicators based on outcomes to specific performance objectives will make it possible to rank employees and present a clear view of the band of talent in each job family. Where an organization marks the ranking in terms of high, moderate, and under performing employees adds that the count of future talent requirements. Talent assessments need to be methodical, data-driven, consolidated and be graded to be a strategic tool.
The summation of these measures sets the groundwork for a realistic approach to acquiring and developing talent for the future. Bring Human Resources and front line Management together to ask important questions: What needs to be improved? Who are motivated to improve? What knowledge and skills do employees need to succeed in their work? How can what they have learned be applied and retained? Can ongoing performance be measured accurately? If talent cannot be developed internally, how can we acquire the talent from outside the company? How do we go about dealing with these gaps?
Adapting an organization to prosper in a talent war is difficult, and one should not act as though it can be done easily. However, this difficulty and the implications of change for the organization, should be cause for failure to act.
“Great things are accomplished by talented people who believe they will accomplish them.”
–Warren G. Bennis
Succession planning is a boardroom topic discussed from time to time; however, almost all companies fail to set-up a program organizationally that can deal with forecasted labor shortages in the not too distant future.
Studies show only about 50 percent of companies has in place a succession plan framework. Those that do, generally have only a process that is aimed at the executive level. Over 90% of companies are insufficiently prepared to ensure critical management and customer-facing positions are filled to levels that safeguard revenue, service and their brand over the next decade.
Secession planning is like changing a tire on a moving car. Human Resource groups are caught up in principally a reactive function that includes a variety of activities – current staffing needs, recruiting and training employees, documenting performance, dealing with performance issues, ensuring company practices conform to various regulations, managing employee benefits and compensation, overseeing employee records and personnel policies. In tandem, front line management is over-involved day-to-day in meeting sales and earnings objectives while ensuring customer service levels and competitive innovation are greater than before. The byproduct of this present-day busyness is no solid strategic plan for long term talent acquisition in what will be the tightest labor market in US history.
How then, do you go about it? A starting point is to better document, analyze and discuss current talent management activities and benchmark this information against an assessment of future needs for talented people. 78 million baby boomers will begin retiring in the next few years, and will continue to do so through 2031 when they reach full eligibility, so any plan should be at least a 10-year plan.
A simple understanding your organization's future talent needs can be made—in raw numbers—by taking into consideration historic turnover statistics, a projection of the number of people currently in the organization likely retiring out, and the amount of new positions created through planned expansion.
Then, organize the performance review process to obtain accurate data regarding existing talent—this process must include measurements of individuals’ performance, as well as indicators of potential and readiness objectively. Using only a few performance indicators based on outcomes to specific performance objectives will make it possible to rank employees and present a clear view of the band of talent in each job family. Where an organization marks the ranking in terms of high, moderate, and under performing employees adds that the count of future talent requirements. Talent assessments need to be methodical, data-driven, consolidated and be graded to be a strategic tool.
The summation of these measures sets the groundwork for a realistic approach to acquiring and developing talent for the future. Bring Human Resources and front line Management together to ask important questions: What needs to be improved? Who are motivated to improve? What knowledge and skills do employees need to succeed in their work? How can what they have learned be applied and retained? Can ongoing performance be measured accurately? If talent cannot be developed internally, how can we acquire the talent from outside the company? How do we go about dealing with these gaps?
Adapting an organization to prosper in a talent war is difficult, and one should not act as though it can be done easily. However, this difficulty and the implications of change for the organization, should be cause for failure to act.
“Great things are accomplished by talented people who believe they will accomplish them.”
–Warren G. Bennis
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