Business psychologists, and a Digby Morgan partner, ML Consulting, supply the very best in development for senior management and work with organisations across a broad range of sectors from small partnerships to blue-chip concerns. Gillian Rankin, from ML Consulting, takes a look at the thorny and much discussed subject of talent management and how that sits alongside organisational performance and productivity.

The extent of the UK’s productivity gap with other leading industrialised countries has been well documented. According to a report by the ESRC, output per hours worked is almost 40% below that in the US and around 20% less than in France and Germany. Looking at output per worker puts the UK in a better light, with insignificant differences relative to Germany, for example. But, while UK workers produce much the same output as German workers, they work much longer hours to do so.

The productivity gap is a problem that has dogged successive UK governments. Obviously, progress in research and development, investment in technology and product innovation will help to bridge the gap. Other infrastructure issues have to be tackled, not least our unreliable and inefficient transport system. Just as importantly, measures will have to be taken to address the shortfall in investment in human capital, the problem of the disaffection of employees and the lack of leadership in organisations.

Employee job satisfaction has dropped over the past decade against many measures defining the economic and psychological contract between employees and their workplace. A report from the Work Foundation showed that a third of British workers are dissatisfied with their jobs. The reasons for this are complex. Some are structural: the British work some of the longest hours in the EU, with one of the lowest rates of job security. The fact that UK legislation protecting employees’ rights is weaker than that in most of its EU partner countries has led to greater flexibility on the part of employers and hence an ability to be more responsive and competitive. But it has also, more negatively, contributed to growing dissatisfaction. Other reasons have more to do with management and work processes.

The Work Foundation suggests that so-called ‘soft options’ can deliver the ‘hard’ result of improved productivity. These include:

• Rewarding creative potential;
• Holding true to social responsibilities;
• Delivering service-centred leadership; and
• Creating a coaching culture

According to Will Hutton, Chief Executive of the Work Foundation, “people: their creativity, ideas and talent hold the key to making Britain a more productive nation. But we need a cultural shift and a new kind of manager that can make use of this resource and transform our working lives”.

Here at ML Consulting – alongside our strategic partners, Digby Morgan - we believe that talent management practices within the HR function hold the real key to addressing some of these critical issues faced by British business. Talent management needs to underpin a broad range of areas including recruitment and selection/assessment, induction, job entry, promotion and CPD via coaching and training. Talent management practices play an important role in creating a corporate culture and instilling appropriate leadership strategies which can, in turn, lead to a more stable workforce and less undesired turnover with its associated disruption and expense.

Culture is the fabric that holds an organisation together and defines, in a broad sense, the expected behaviour of others. Evidence shows that companies with strong cultures have strong financial performance. However, in trying to define and shape the cultures within their organisations, companies can fall into a variety of traps. They may define their culture in a “cookie cutter” way, much in the same way as they write their mission statement. The cultural aspirations are then neither believed nor realised. Alternatively, there may be a mismatch between what the management says the cultural values are and what happens in reality. Employee disenchantment becomes inevitable.

Recruitment is another critical area. There are some companies that make the mistake again and again of hiring the wrong people for the wrong jobs. A suitable talent management system - designed and used appropriately - can help define the relevant competencies and key success factors, thus reducing the risks associated with the recruitment process. Occupational psychologists can make an important contribution in defining these competencies in contrast to a standardised ‘off-the-shelf’ list. They can then design robust assessment procedures to inform selection processes, partnering a search firm to ensure best practice and rigour throughout the selection procedure.

Strong top-level leadership creates a healthy corporate culture yet chief executive dismissals and forced departures of other board members reached record levels in the UK last year. Despite this, the vast majority of UK companies are failing to develop effective talent management and succession planning strategies. By not addressing this critical corporate governance issue many boards are ignoring a key requirement of the Combined Code, introduced by independent regulator the Financial Reporting Council (FRC) in the wake of a wave of corporate scandals in which investors lost billions.

So what practical measures can be taken? The link between the quality of leadership and an organisation’s success is indisputable. Getting leadership right has to be one of the most important challenges that any organisation faces. Leadership that involves engaging others as partners in developing and achieving a shared vision leads to greater productivity. As Allan Leighton, Chairman of the UK Royal Mail says, to improve productivity one has to “identify and define the ‘best way’ of doing things and then communicate it simply to staff”.

Leadership is about creating a work environment that fosters creative thinking and encourages others to challenge the status quo. It’s also about displaying much greater sensitivity to the needs of a range of internal and external stakeholders. When defined in this way, it becomes clear that leadership is not about being superhuman nor, in fact, is it always rare in organisations. It is accessible to most ordinary mortals, though for many, help is needed in order to develop leadership qualities. Executive coaching is a development tool that can enable individuals to acquire or hone such leadership skills.

Employees who are inspired by their leaders, who believe that a genuine interest in them is displayed and that their contributions are valued, are employees whose job satisfaction levels increase even if the formal terms and conditions of their employment remain unchanged. Those who are trusted to take decisions and to demonstrate initiative, whose managers develop their strengths and adopt a coaching approach rather than promoting a blame culture, display higher levels of commitment to the organisation. Quite simply, employees who are engaged emotionally are more committed, motivated and, ultimately, more productive.

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