‘Talent Strategy’ continues to be a hot topic amongst HR professionals and business leaders. As competition for the most talented individuals increases, organisations constantly wrestle with new challenges that will help them attract, retain and develop those with the potential to fill critical business roles. Dr Maria Yapp, CEO of Xancam an established firm of business psychologists that specialises in identifying and developing talented leaders, has just completed a survey into this issue that has provoked some intense debate.

We sought the views of over 100 talent professionals on Talent Strategy. They work for leading organisations including Allianz, Bank of England, the BBC, HSBC, Prudential, WH Smith and Zurich to name a few. While they agree that investing in talent remains a crucial factor for the on-going success of their business, fewer than half could say that their talent strategy was well defined or that it was operationalised in a satisfactory way. We additionally identified some common ‘pain points’ typically experienced by major organisations when developing and implementing talent strategy.

Who do we Consider ‘Talent’?

Most respondents agree that ideally, the term ‘talent’ would embrace people at all levels in the organisation. In practice however, for most companies, talent strategy focuses on identifying and grooming the business’s future leaders. This brings with it the associated problem of ‘elitism’ – is it beneficial to have a publicly declared fast track and to what extent does this risk disenfranchising those not so designated? Most respondents are prepared to bite the bullet and identify those identified as ‘talent’ openly. This does of course mean opening the business up to certain risks – such as talented individuals leveraging their position, or even choosing to seek opportunities elsewhere. However our own experience with clients is that if managed appropriately, then genuinely open opportunities to be part of the talent pool actually improve factors such as morale and retention – even amongst those not officially designated as ‘talent’.

Is Talent Strategic Enough?

If businesses focus talent strategy on the development of their future leadership pipeline, then a link between talent strategy and business strategy is critical. In our survey, most (but not all) respondents agreed that they had established that link. However the observed relationship was predominantly ‘top down’ – talent strategy is developed as a response to business strategy. There is rather less evidence that talent professionals proactively shape or contribute to overall business strategy. A recent CIPD report identifies five levels of maturity in organisational talent management:

1. No talent management strategies or formally developed practices
2. Isolated/ tactical local ‘pockets’ of talent management activities
3. Integrated and coordinated talent management for particular segment(s) of the organisation
4. Talent management strategy designed to deliver corporate and HR management strategies
5. Talent management strategy informs and is informed by corporate strategy

(Source: Talent Management: Understanding the Dimensions, CIPD, October 2006)

While the talent professionals we surveyed reported a predominant ‘Level 4’ focus, the Economist Intelligence Unit recently reported that ‘talent’ is moving ever higher on the CEO’s agenda and will become an increasingly important source of strategic advantage in the future. Considering this, the case for talent professionals to operate at ‘level 5’ is unarguable although this carries with it implications for their professional and commercial development.

We Know who our High Potentials are… or do we?

Fewer than half of those surveyed were able to state with confidence that the organisation knows who its high potentials are. A number of different methods and approaches are used to identify people with ‘potential’. However, not all of those methods are guaranteed to distinguish between people with true future potential and those who are just good in their current role… and there is a difference.

Most respondents saw that there was a need to distinguish between ‘high performers’ and ‘high potentials’ – but some were more clued up about how to do this than others. In fact, it is a common finding that those factors which predict effective performance in a current role or at a current organisational level, simply do not stand up to the job when it comes to the task of making longer-term predictions about who has what it takes to assume a substantially larger role in the future. Organisations who are successful in this regard take a research-based approach to the problem. They incorporate leading-edge data on the factors that identify high potential with a focus on the organisation’s future priorities and business drivers.

The Retention Problem

The issue of successfully retaining the business’s top talent emerged as a major issue in the survey. Of those questioned, almost 60% believe that other companies in their sector are now competing more aggressively than ever with them for talent – but fewer than 15% could claim that their methods for retaining top talent are effective.

With the increasing mobility of today’s workforce, the retention issue is a problem that will not go away. And it is set to become an even bigger issue in the future. Coming soon to an office near you is… Generation Y. Born around the early to mid 1980s, the next generation is more demanding of experience and variety than its predecessors. They are predicted to have as many as 10 career changes in their lifetime – yes, that’s career changes, not just job changes – and many are likely to leave the corporate mainstream to set up in business for themselves.

The respondents to the survey agreed that businesses will have to become significantly more creative if they are to tackle this issue successfully. One argument is to follow the path of least resistance – i.e. to accept that people will leave within a given timeframe and to adjust the business model accordingly. This may include altering the operating mode so that more flexible working relationships enable both the individual and the business to flourish. It may mean working more creatively with diversity. It can also include retaining strong relationships with leavers and building the business’s reputation as an exporter of talent. Another approach is to focus less specifically on ‘retention strategy’ but more broadly on creating the environment and culture that is so compelling and engaging that talented people will have very little incentive to leave.

Is Development the Answer?

It would seem so. Recent research indicates that 44% of people cite insufficient development or career progress as the principal reason to consider leaving an organisation. With this in mind, many organisations focus on creating attractive career development propositions to retain their best talent.

However, not just any kind of development will do. Research on people designated ‘high potential’ has identified that this is a demanding group whose expectations of development activities are significantly different from those of the mainstream management population. Amongst other things, ‘high potentials’ are most strongly motivated by:

• Access to (and mentoring from) the most senior people in the business
• Opportunities to prove themselves in high-profile, high-risk roles
• Individually tailored development (not sheep-dip programmes)
• Broad commercial exposure to increase their understanding of the business as a whole
• Activities that continually expose and stimulate them – they are quick to get bored!

This view is confirmed by recent findings from the CIPD, who report that receiving experience and coaching are significantly more effective for high potentials than standard management training. We also know that while high potentials like to be stimulated and active as part of their development, this means having ‘real’ jobs – not special projects that have been created specifically to give them a particular experience. Flitting from one short-term project to another certainly keeps people busy – but talented individuals see it as insubstantial and lacking in meaning. Finally, while they like active learning (i.e. real roles and work challenges), this is not to be confused with ‘action learning’. The latter is defined as the opportunity to meet regularly with others and reflect on and learn from experiences and to solve problems jointly. This is reported by research not to be a particularly effective means for developing high potentials.

Our research paper, ‘Talent Strategy For Real Business’, summarises these and many other of the findings in more detail. To receive your complementary copy of ‘Talent Strategy for Real Business’ please go to www.xancam.co.uk/whitepaper_ts.html

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