News

December 14, 2009

Building a Better Business: Implementing a Top Talent Strategy to Achieve Success

NEHRA's Insights Newsletters
by Susan Miele

For decades, human resources professionals have been fighting for a spot at the C-Suite table, and recently more are being invited.  Savvy leadership teams have finally begun to realize that the importance of the human resources role lies not just in benefits, administration and payroll, but also in managing the company’s most valuable assets: its people. 

Of course, now that HR executives have a seat, they need to prove their worth. One way to do this is by developing and implementing top talent strategies which go beyond the traditional talent management programs. Top talent strategies create a foundation for acquiring, developing, deploying, and retaining top-performers within a company to give the organization a competitive edge. This approach also ensures that the company has the right mix of people to guarantee organizational success. 
 
So why should you take the time to implement a top talent strategy?  For starters it can provide greater business operations intelligence by addressing such questions as: How can our people work best for us? What tools and training do they need to be successful? How can we track top-talent turnover? Where are our next leaders coming from? Do we have the bench strength to lead the company into the future? How can we identify and cultivate our stars? 
 
Yet, even the most comprehensive top talent framework will not be effective unless it is aligned with the organization’s overall business goals. Integrating the top-talent strategy with the company’s business strategy allows for clearly defined and articulated goals, the development of specific actions required to achieve those goals, and a means to measure the success of the efforts. 
 
As the economy continues to falter, talent management is emerging as a critical issue. Because of the recession, many organizations have undergone major changes, such as lay-offs, office closings, department foldings, or mergers and acquisitions. Organizations may be leaner, with fewer employees, which makes it even more critical to have the right mix of talent in the remaining staff.
 
 
Here are some reasons why HR executives should devote their time and resources to a top talent strategy:
 
Talent directly correlates to value—It is an uncomplicated theory: Top-performers are simply worth more to the organization. Yet, identifying and cultivating that talent can be complicated because as the complexity of the job increases, so does the variance in performance. Out of 1,000 financial analysts, neurosurgeons, or engineers, only a handful can be the best and brightest in their field. Company leaders want to make sure that they are securing and nurturing talent from this small pool of “stars,” instead of wasting resources on those that are just average at their jobs. Bill Gates, founder of Microsoft, seems to understand this philosophy, evidenced by his statement, “A great programmer is worth a hundred good ones.” 
 
Mismanagement of talent leads to loss of money—The costs associated with recruiting and retaining talent is straightforward because the funds that support these programs can be easily tracked and recorded. However, the cost of losing talent, making a poor hiring decision, or not having a viable succession plan in place can be more nebulous. Assessing the financial burden of losing key people is difficult, and the impact on a company can be felt immediately through loss of productivity. The cost for operating without a key player is estimated at a minimum of $7,000 per day, according to Dr. John Sullivan’s 2005 findings. For companies that make the wrong hire, 40% of these “bad fit” hires are expected to fail within the first year according to business strategist and author, Ram Charan. Furthermore, a Harvard Business School study found that a poor hiring decision can cost a company as much as two or three times that person’s annual salary. Hiring the wrong person can also impact the company in less tangible ways. For instance, it could diminish the efficiency and morale of a workgroup, team, or whole department, thereby disrupting working relationships with clients or vendors. It can also lead to a lack of trust in the organization as a whole, eliciting sentiments such as, “Why would they hire this person?”
 
Lack of Bench Strength Creates an Organizational Risk—Companies are unable to grow and succeed if they don’t have the talent in place to lead them into the future. Yet, an overwhelming number of American businesses aren’t prepared to meet their organization’s talent needs. In fact according to Charan, 70% of organizations say that they have an insufficient pipeline of talent for critical jobs. He also found that the numbers are equally disappointing for leadership roles, where 67% of companies do not have the people in place to prime for leadership positions. 
 
Developing talent from within is the best option—If possible, it makes good financial sense to cultivate existing talent into the next generation of leaders—those who have been identified as key players in the company. This stands to reason since current employees are already ensconced in the organization and understand the company’s culture, values, and goals. There is also an inherent risk in hiring from the outside that the hire won’t be a good fit. In fact, a study by The Human Capital Institute found that failure rates for “imported” as opposed to “grown” talent are two to three times higher and that developing talent from within can cost as much as 1/50th  less than hiring new talent. 
 
Awareness and accountability is increasing—This is an opportune time for human resources executives to implement a top talent strategy. More C-level executives are beginning to understand that properly managing their talent needs is crucial to their organization’s success. They are motivated to consider talent as a vital business issue because their board members, shareholders, and investors are demanding it.  In approximately half of all companies, talent strategies are a board-level issue, according to The Human Capital Institute. Investors are also concerned about talent management and succession planning and want to see more tangible evidence that something is being done to prepare for the future. 
 
If a top talent strategy is the correct approach, what makes this type of program successful?
 
The 70/20/10 Framework
The way to develop a successful top talent framework is to base it on a proven leadership development strategy: the 70/20/10 Framework. This approach is founded on the theory that to become an effective leader, we need to learn “on the job.” Consequently 70% of the strategy relies on action-learning or on- the-job learning, 20% on coaching and connections, and 10% on training programs.
 
Workplace learning drivers—The most effective way to learn is to be immersed in the organization, the job, and it’s challenges, which is why 70% of the framework is dedicated to workplace learning drivers. Action-learning is emerging as a major factor in leadership development programs. It is successful because the learning is actually based on work, not an abstract theory described in a text book. Some of these drivers include stretch assignments, changing jobs or job rotation, transfer and travel, cross-functional task forces, and the “see one, do one, lead one, teach one” approach, where the employee can see how it is done, try it, lead a team on the issue, and then teach it to another. This strategy allows employees to solve urgent, “real” problems, build workable teams and strengthen the leadership skills that are most essential to the organization.
 
Coaching and connections—Of course, not everything can be learned on the job. Some skills are acquired through coaching and building relationships. The coaching component, which accounts for 20% of the framework, consists of mentoring programs, competency and skill development, 360⁰ feedback, and social networking. The social networking piece doesn’t mean helping employees become proficient on Myspace and Facebook, but rather it aids in facilitating relationships that can help them become well-rounded, skilled, and accomplished leaders. The employee learns how to locate centers of expertise within the organization and connect with the right people across the company, which enables faster collaboration and results. By fostering relationships within the organization, leaders learn to depend on each other, build teams to solve problems, and achieve results cohesively. 
 
Training Programs—The remaining 10% of the program draws upon traditional training courses and self-development programs. These initiatives should be tailored to meet the specific needs of the employee in order to help build the desired skill sets. 
 
So whether you have reached the C-level suite yet or not, this is an exciting time for human resources executives. Never has there been so much evidence that talent management programs are the key to businesses success, and never have leadership teams been more motivated to institute these programs to gain a competitive edge in the marketplace. HR professionals have the unique opportunity to prove their value to leadership by creating a top talent framework that allows people to thrive in a way that is consistent with the goals, values, and culture of the organization. By aligning the HR strategies with the business strategy, HR initiatives can help the organization achieve its goals and have a tremendous impact on the bottom line. 
 

“expand your capabilities”