Test your talent How does your approach to talent strategy measure up?

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1 1 Test your talent How does your approach to talent strategy measure up?

2 Talent strategy or struggle? Each year at Head Heart + Brain we carry out research projects to help understand best practice in leadership, talent and capabilty. In the year 2012 we ve focussed on talent strategy. We wanted to understand what the best organisations do to identify, manage and grow talent. We also hoped to find a model of best practice that organisations on the path to excellence might learn from. But what we found wasn t what we expected. It turns out most organisations still feel they re struggling to really nail what s at the heart of talent strategy. Some felt they were simply not in a position to take part in research on what good looks like (a first in our experience!). Those that did were hesitant to call what they were doing best practice. Not what we expected. But equally interesting. Our research partners 20 organisations helped us with our research. These organisations came from right across the globe and from several different sectors. We d like to say a big thanks to them all, including: Oracle John Lewis Santander Morrisons RSA M&S Deutsche Bank ANZ TaleoX 2

3 Take the test While we didn t find a best practice talent strategy model, we did find many stories of innovative talent practice. Through these we ve identified a set of questions any organisation should ask itself in order to test its approach to talent strategy. These questions on the next few pages are ready for you to answer (you can also see an overview of all eight questions below). Each question can be answered on a maturity scale where 1 is typical of the statement on the left and 10 is the statement on the right. Then compare where you think you are on the scale, to a rough average pulled together from our research. So take the test, see where you d place your business today, and be sure to let us know how you got on! What s your process to define talent strategy? How do you design your talent processes? How easy is it to explain what you do and why you do it? Are Centres of Expertise working towards common goals? What have you done to up skill your HRBPs? Who is responsible for managing talent? What do you measure? How, what and to whom do you communicate? 3

4 What s your process to define talent strategy? Research average: 4 ( 1 being all the way to the left and 10 being all the way to the right) On the whole, HR aren t creating their talent strategy in total isolation. Instead they re taking their business plan away and deciding what it means for their talent strategy then selling this talent strategy back to the business. This isn t a disaster, but it s not very collaborative particularly the thinking phase. HR are thinking up their talent strategy without their non-hr colleagues, which means they then have to push the strategy back into the business. Sell it in if you like. In contrast, if you do the thinking part with your non- HR counterparts, they ll share ownership of the strategy. They ll trust what you re doing. You begin to create a pull factor. Best practice One major global bank we spoke to is building a pull factor for their talent strategy. They told us two things that really helped: They created a continuous dialogue with the board about how elements of talent like leadership, performance and diversity supports the bank s goals. They show how relevant their talent strategy is to the business through indicators linked to their business profitability and goals. Such as the quality of their leadership links to the profitability of a business, the level of diversity of their sales people links to the satisfaction of their clients. The result has been more demand from the senior team for talent conversations, initiatives and a shift in the degree of transparency and trust the business has in their talent processes. While 71% of the organisations we interviewed had a formal talent strategy, only 25% had a clear and formal process for formulating it. 4

5 How do you design your talent processes? Research average: 5 Here, most organisations are at about a 5 they told us they use standard best practice talent processes like a 9-box grid. Copying from a bestpractice book is better than nothing, of course. But designing unique talent processes and tools aligned to your business strategy and future goals is better. There were relatively few organisations doing this. A number of organisations described the frustration they were experiencing with tools like the 9-box grid but were also finding it difficult to know what to replace it with. Best practice One UK retailer we spoke to had designed their talent strategies based on their business strategy. Here s how they did it: Forward thinking The board ran a leadership conference to identify what their business would need in They discussed what new people, skills and mindsets they would need in the business. Business led Their leadership team and people managers own their talent strategy. Talent is a permanent agenda point on board meetings and divisional directors meetings. HR data and processes HR helps the business drive talent strategy by providing the data, owning talent processes and coaching business leaders to improve the way they spot talent and engage their teams. Consistent Their talent levers are designed to meet specific business goals. The profiles and competencies are consistent across all different functions. So success reinforces success across the business. Well measured They measure things that show the link between talent strategy and business success. For example, they show how the quality of leaders, employee engagement and customer satisfaction can predict the profitability of stores. 5

6 How easy is it to explain what you do and why you do it? Research average: 5 If someone asked an HR director to explain your talent strategy, what would they say? What about a people manager? Most organisations we spoke to said their HR people understand the process of talent development, but couldn t describe its benefits to the organisation in a couple of sentences. Their people managers could tell you how they identify high potentials and successors but not why it helps to meet business goals. Making sure your talent strategy is understood in the business is important. The business will be executing your strategy, after all. If they are not clear why developing talent right across the workforce is important, people will have limited buy-in or focus. You ll end up with people managers only doing the basics, like focusing on high potentials. People also tend to be sceptical of the value of talent processes. If your talent strategy isn t easy for people managers to get, they won t buy into it. This is one of the biggest barriers to successful execution. 6

7 Many of the organisations in our research said their talent strategy covered all employees. But, in practice, most only had detailed execution plans for leaders and high potentials. Best practice Define talent clearly Surprisingly, 6 of the 20 organisations we interviewed had no formal definition of talent. Definitions provide something simple to communicate, tangible to remember and permanent to judge against. Launch processes one at a time A new talent strategy might involve several new talent processes like assessing potential for the future and coaching people on career goals. Don t launch them at once; it will overwhelm people managers. Instead, check managers have the bandwidth to take on something new. Then pace the roll out, with a change programme for each new process. Use business-related metrics Use metrics that show the benefits your talent strategy will have. Like showing how training store managers helps to meet growth plans. Or how strong leaders impact your bottom line. 7

8 Are centres of expertise working towards common goals? Research average: 2 We only found one example of Centres of Excellence (CoEs) aligned around common goals. This is a critical challenge. Without alignment you find yourself recruiting based on one profile, training people in skills to fit another, then rewarding people for demonstrating different behaviours altogether. Why are CoEs so hard to align? One reason is that some organisations don t have defined talent profiles. So CoEs don t have anything to align to. Another is that most organisations tend to rely on one lever at a time to execute talent strategy, mostly leadership development, learning or resourcing. They re not being used in tandem. So no one notices the undermining effect one lever has on another if they re not pulling in the same direction. Finally, the people who run CoEs don t even feel like they should be talking to each other. They see themselves has having a recruitment strategy, a compensation strategy or an L&D strategy. They don t see these feeding into talent. Best practice Our research did come up with one great example. In this retail giant: The CoE s agenda was created from the overall HR business plan which in turn was derived from the Business strategy. If it wasn t on the plan it didn t happen. There are common talent goals and measures of success for CoEs. The measures were about the impact on the business of their strategy, policies and initiatives. They use a single leadership competence framework to drive performance, development and recruitment, and through performance the compensation of the senior leadership team. Members of the CoE function had personal goals aligned with the HR business plan. In short, everything the CoEs are incentivised to do helps achieve their talent aims. 8

9 What have you done to up skill your HRBPs? Research average: 6 Most HRBPs are skilled in talent processes, hence the high score here. The gap is having the skills to spot talent, coach and challenge people managers, and guide them in day-to-day talent management people issues. The reason is partly HR being cobblers children concentrating so much on training others they don t make sure they get the complete set of skills they need themselves. But it also reflects the fact that, up to now, there s been much more focus on processes generally, rather than how you use those processes to achieve good results. Best practice Organisations with the most talent-skilled HRBPs do the following: They integrate process and skills training for HRBPs. This includes just in time modules at key periods in the talent calendar to provide HRBPs with the right skills just as they re about to need them. They also create elearning modules to keep skills and knowledge of processes up to date. They train BPs specifically on how to challenge, assess, plan and facilitate constructive conversations on talent. All these skills are needed when supporting managers to develop talent. There s a direct correlation between the quality of an HRBP s skills and the quality of a manager s talent assessment and development. So part of the data they measure to assess HRBP competence is the success of their people managers. They focus on consistent process execution and communicating the benefits of the talent strategy On average, organisations judged their success at talent strategy execution at only 5.7/10. 9

10 Who is responsible for managing talent? Research average: 4 4 means people managers sort of know it s their job. But they don t have the skills to do it. They struggle to coach people. They can t cope with challenging conversations like telling people they re not high potential. And they don t develop people for future roles. Instead they manage people to perform today. Many also still believe developing people for the future is HR s job. You can t blame the people managers for this. The fault lies with HR for not making it clear that talent management is a people manager s job. And then for not giving them the skills to do it or making sure they re rewarded for it. Best practice At 10/10 you d have a manager who knew exactly what a person with high potential would look like, be able to identify them, and know it was their job to do so. They d then put plans in place to help that person achieve their potential, and get rewarded for doing it. To do that, our research identified three core skills people managers need to have: Courage to have difficult conversations. To muster the courage to have difficult conversations, managers need to understand why they re so important. One way to do that is to show the business impact of good and bad talent decisions using data from performance management and achievement of goals. Measuring and recognising potential. Some people might well have an eye for spotting talent. But people can also learn it. What they need is a clear definition of what they re looking for particularly a clear definition of the signs of potential, like a success profile which clearly describes the skills and mindset of the people with potential to execute the future business strategy. Coaching so they can develop and manage careers. 10

11 What do you measure? Research average: 3 Lots of organisations measure the health indicators of their talent processes like the number of promotions or training hours delivered in a year. But very few are measuring whether these activities are helping them achieve their business goals and making them more successful as a business. The outcomes of the talent processes, if you like. really well have gone to a lot of effort to understand what the linkages are. It s very difficult to say what impact some of these things have on actual business results. But the companies that are measuring their talent strategies Best practice The best organisations we found were measuring the impact of their talent levers on profit and achievement of business goals. Like how many new stores are opened on time, or whether a business achieved its growth targets. For example, one retail company we spoke to has been able to measure that, if one of their shops has high customer-service and employee engagement scores, that shop will be in the top quartile of profitability. And vice versa. Another organisation measured a similar thing: they took their leadership 360 data, engagement scores and customer satisfaction scores. By looking at them together they were able to accurately predict profitability in different parts of the business. 11

12 How, what and to whom do you communicate? Research average: 6 At the top of the scale you know what the business impact from your talent strategy is and what you re trying to measure, you can measure it in real time and you re communicating the results regularly. The majority of organisations we spoke to were at the other end, with sporadic communication of talent outcomes to senior management. Or communication on process not results. The main blockage is you can t communicate what you haven t measured. Organisations that aren t measuring the impact of their talent strategy are struggling to communicate its benefits. 12

13 Best practice How? We found best-practice organisations spread their communications wider than senior management, using multiple channels to inform, create insight and get feedback. One insuranceservices business we spoke to ran a programme for all their staff using the idea of a talent showcase. The aim was to show people the opportunities to progress internally and stop people moving away to move up. Each month they told the story of a different employee, how they moved and built up their skills and experience. The result was more internal roles started to be filled by internal people, and interest in internal roles went up. What? The best communicators talk about results and benefits as well as processes. It makes the business sit up and listen. For example, one retail organisation launched a new development programme for store managers explaining that, through better training, they would cut the time it took for people to get to store manager level from 1 year to 6 months which would allow the business to speed up their growth plans. To whom? The debate around transparency of talent rages on. In our view there s too much debate about the theory, and not enough about the practicalities. Being totally transparent to people about your long-term plans for them only works if it fits your culture, and your people managers are skilled enough to handle the fallout. Otherwise you re probably better off not being completely open. Either way, decide your own position on transparency by working through scenarios that illustrate the impact transparency is likely to have on your business s culture and see how well equipped you are to deal with those impacts. 13

14 How did you do? Realised you re in better shape than you thought? Do you have best practice examples of your own to share? Then we d love to know. Or feel free to send us own examples for others to learn from. Or do many of the problems we found in our research sound all too familiar? In which case, we can help. 14

15 Further information The Head Heart + Brain team have deep understanding and experience working with businesses to help them make a difference to their business Talent. If you would like to find out more about our talent work and research get in touch at or visit our web site The team at Head Heart + Brain work with the rational and cognitive content - the head; with the emotions focusing on how people are successful -the heart and with the brain using the findings from neuroscience to inform their work. 15

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