Optimizing Talent as Organizations Flatten

Optimizing Talent as Organizations Flatten

by Grant Ricketts and Rob Pannoni

The world is flat. At least in the business area, it is. In this flat world, talent management has much in common with traditional supply chain management, specifically a focus on interconnected networks, efficiency and performance.

Welcome to the strategic supply chain business. This is what talent management in a flatter world has become. Traditional supply chain management involves a network of interconnected processes engaged in the provision of products and services. These processes span movement of materials, work-in-process inventory and finished goods from point of origin to point of consumption. The objective is to create value, build competitive advantage, satisfy customers and optimize performance in terms of efficiency and effectiveness.

Talent management, however, often involves separate silos of activities for different functions, such as recruiting, learning and development, performance appraisal, promotion, succession planning and compensation. These activities are seldom interconnected. Several different systems may be used, with different groups following their own insular processes. Competency models, a potential link across talent activities, are often fragmented or vary across segments of the organization. Instead of highly coordinated processes like the manufacturing supply chain analogy, there are fragmented efforts with separate islands of technology and an inability to integrate and unify data about the most important asset to a company - its people.

The aforementioned picture is highly inefficient. A substantial percentage of annual corporate expense is invested in people. Thus, the overall inefficiency loss due to fragmented talent operations is easily in the millions of dollars per year for medium to large organizations. Talent leaders also have to ask whether current processes are effective. Are they set up to optimize the value of an individual's contribution to the firm and of the firm's to the individual? Do they achieve the talent depth, breadth and degree of deployable readiness needed? Do they even know what metrics are necessary to evaluate or support this assessment?

In most cases, the answers are no. There has been substantial research from companies such as Deloitte, IBM, Hewitt, Mercer, the Corporate Strategy Board and others on the relative preparation of organizations in addressing these talent challenges. All point to similar conclusions. "HR in the Age of Talent," a 2008 Human Capital Institute study, indicates only about 20 percent of HR executives interviewed believe they are well-prepared. Nearly 20 percent openly admit they're unprepared, leaving about 60 percent at various stages in between. Findings by Deloitte Touche Tohmatsu and Economist Intelligence Unit in their 2007 study, "Aligned at the Top," were even bleaker. Only 4 percent of senior business leaders thought their companies were world-class in talent management.

The Talent Management Life Cycle Model

To take an enterprise view of talent, it is useful to have a talent management life cycle model. The model depicts the life cycle of a hypothetical employee as well as the various talent activities associated with the stages of the life cycle. The model explicitly includes recruiting, on-boarding, learning and development. The learning stage represents the one-time training it takes to get employees up to speed in their role, while development represents ongoing improvement over time. The model implicitly includes functions such as performance assessment, compensation and succession planning because they impact retention. While the model is constructed as if it represents a single role, it can be generalized to reflect the average employee trajectory in an organization.

The gray area represents the total potential contribution of an employee over time, an optimal state. The green area represents actual contribution. The shape of the green curve is dependent on a number of variables, including length of tenure, skill set match for the position, individual performance, level of engagement, rate of performance improvement and subsequent promotions. It represents the realized productivity contribution. The dip in the model represents an employee transition - the loss of an employee and the time it takes to find a new one and get that person up to speed. Given the model, the obvious question is how do we get the green area, the actual employee contribution, to map more closely to the gray, the potential contribution?

Connecting the Dots

There are three keys to using a talent supply chain model to improve an organization.

1. Examine the data flow and handoffs between functions to find ways to increase communication and build more coherent, efficient processes.

2. Look at talent functions in the supply chain to identify where the biggest opportunities are to maximize the employee contribution curve.

3. Use collaborative technologies to improve communication between employees and across groups.

Improving Handoffs

Typically, the tools and data used for a particular stage of the talent life cycle originate and are used solely within that stage. For example, while the job description or competencies used for hiring could be useful for the development of learning materials, performance appraisal and even succession planning, rarely is there a formal process to share or to optimize the information to accommodate multiples needs. Information should flow many ways.

Identifying who is responsible for each life cycle stage in an organization is the first step in coordinating better information flow. Once the relevant stakeholders have been identified, talent leaders can begin to identify what information would be useful at each stage, how to optimize the information to make it more broadly applicable and how the information should flow through the talent life cycle processes.

It's important to be clear about goal setting as well. Goals cascade across the organization, and performance needs to be evaluated in the context of these goals so competencies and skill requirements are consistent. Many talent management processes miss the notion of cascading goals.

Identifying Gaps in the Curve

One way to re-examine talent processes is to envision the shape of the curve for an organization. Key metrics may help, if they are available. What's the average length of time it takes to fill an open position? Are new hires starting high enough on the proficiency curve? How long does it take to get someone on-boarded and up to base proficiency? Is the average level of proficiency for employees as high as it could be? Are retention problems causing undue gaps?

Finding the weak points in the talent curve can identify which types of talent initiatives will have the biggest payoff. It also illustrates gaps that may not otherwise be apparent. If an organization is quick to hire and train employees but retention is poor, the net contribution curve for employees may actually be worse than it is at an organization that hires and trains slowly but has a longer average tenure.

When thinking about talent strategy, there is a tendency to focus on recruiting. The reality is that learning and development, often housed in a different part of the organization, is critical to the talent picture. If learning and development efforts can create even a modest increase in employee contribution, say 5 percent, that increase will compound over the years the employee is in place. The overall gain in contribution from learning and development will overtake a gap in recruiting. Connecting learning with other talent processes also ensures that recruiting means hiring for real talent needs and not compensating for a lack of ability to train required knowledge and skills into the existing workforce.

Leveraging Interpersonal Networks

The linear focus of the talent supply chain perspective masks an important reality. Talent is not just a business process. It's a culture. Fostering and tapping into lateral connections that employees make across the organization is critical to myriad talent processes, such as locating internal candidates, identifying outstanding performers, increasing knowledge flow and improving employee skills. Many performance management programs overlook the important role that brokers and connectors play in an organization. Identifying these types of value contributors introduces new roles and succession networks within the company.

Raytheon has published several examples of how it used social networks to identify key relationship brokers in different parts of the organization and placed them in specific assignments where they worked as coaches, mentors and facilitators, tapping into their previous networks to bring in more bench strength for critical business initiatives. This opened new career paths for some individuals who would have been bypassed in more traditional appraisal perspectives. As one executive said, "An isolated person will arrive in a new assignment and say, 'Here's what I can do as an individual.' A broker will arrive in a new assignment, assess the needs and then pull from his or her network to address the needs. The broker brings growth."

Analysis of user contributions to collaborative knowledge sharing and other portfolio techniques also can improve the performance assessment process. Peer ratings of contributions to a social network provide feedback similar to what one might get out of a formal 360-degree performance assessment, but with much less effort.

In short, Web 2.0 technologies applied in the enterprise can connect people and help them feel more engaged, improving many talent management functions. Worker communities become organic, and talent managers have more ways to farm talent. Connections among employees are more lateral and less reliant on hierarchical structures and approaches.

The ultimate shared goal for senior executives and talent leaders is to build a talent-rich organization with maximum productivity and zero talent outages. Thinking of talent processes as a supply chain that spans the talent life cycle can help talent leaders become more strategic in how they recruit, deploy, train, manage and reward people in their organizations. The goal is not just to create efficient talent processes, but to create a talent culture where there is collaboration and shared ownership of talent across the organization. A talent-aligned enterprise will get the most out of its people and create a level of success that cannot be achieved any other way.

[About the Authors: Grant Ricketts and Rob Pannoni are principals at Razor Learning.]