The term talent management is such an enigma. In an industry that consistently reinvents its vocabulary, never before has a human resources term garnered so much attention and yet been so misunderstood and overly hyped. And by some, overly scorned. Ironically, given the number of articles, books, presentations, and rhetoric on this subject over the years, talent management remains a mystery to most.
Questions persist. How does organizational talent become capability? Why do so many otherwise exemplary companies continue to acquire, develop, and deploy their talent with isolated practices that, if put together, could be so much more effective? Why do so many leaders proclaim that people are their most important asset but don't manage that asset from a unified view? Why do organizations go to so much trouble to acquire the best talent, only to keep those soloists in a private studio and never assemble the orchestra for virtuoso performances?
Our perspective comes from observation, research, and conversations over many years. Our two organizations, the Institute for Corporate Productivity (i4cp) and ASTD, have collected data through multiple studies on how companies acquire their talent, how they develop it and manage it, and what works and what doesn't. Between us, we've had conversations with thousands of people whose professional lives center on the effort to make organizations perform better through their people.
Often there is understandable logic to the way companies approach the acquisition and development of talent today, but typically, it's an approach built on the avoidance of pain - the pain of breaking familiar patterns and doing things differently. Whole industries behave this way:
The five-year plan. The selection of high-potentials by some calcified numerical formula. Succession planning that ignores the reality of a mobile workforce. Recruiting in a vacuum. Development divorced from strategic direction.
You probably have your own list of talent-related practices that no longer make sense in a fast-moving world.
Herein lies the real puzzle. While so many companies know that talent matters for growth as well as survival, managing it as a coherent strategy is still very rare. Despite all the attention paid to the idea of talent and its management - remember the "war for talent" breaking out nearly 15 years ago - the practices surrounding it are largely unchanged. In many companies, even several with dedicated talent officers, talent management is still regarded as just another term for succession planning and executive development. While research clearly shows that functions such as performance management are most easily integrated with learning and development, why is it that so few companies actually do integrate them?
We've seen too many companies whose talent management practices continue to be stuck in silos - a metaphor, we'd like to point out?from the agricultural era. In today's knowledge-worker era, these silos, all under the umbrella of HR, often have their own agendas, compete with each other for available budget, and actively work against each other to gain political power. We believe that this too common reality in companies is not only immature, it's unproductive. True integration is long overdue and deeply necessary. Even talent management pundits and zealots will secretly admit that there are too few examples of companies that are actively and successfully integrating the silos.
Another factor inhibiting integration is the inability of the current crop of talent management technology suites to work well together. Mergers among talent management software companies have moved us closer to the technical functionality needed, but the true "complete" solution doesn't exist yet. Buyers must still integrate multiple vendors' products to achieve the functionality they need.
Despite the ragged state of talent management, the landscape is slowly changing. We have come across several corporate practitioners and industry experts who have success stories to share - sometimes small, sometimes revolutionary. Companies such as Cisco, Agilent Technologies, Novelis, 3M, Hertz, and others, and thought leaders including Dave Ulrich, Peter Capelli, Beverly Kaye, and Ed Lawler gave us great, concrete information on talent management successes. Recently, we put their stories in a book titled The Executive Guide to Integrated Talent Management and gleaned some lessons from them, which we'll get to in a moment.
We have an admitted bias: From our research and observations, it is clear that the learning function has a critical role to play in integrating talent management. What the research shows is that all of the traditional HR silos can and should integrate on some level with the learning function for all to be more strategic and productive for the organization.
It's amazing today that, after more than a decade since the term "talent management" was introduced, nearly everything spoken or written about it still starts with a definition. Many, including some that we've written, are so comprehensive as to be incomprehensible. While this may be a symptom of a practice undergoing growth pains, it has only added to the confusion.
A key concern is which HR components are to be included in integrated talent management. But this is one part of the confusion that makes sense. Not every organization has the same kind of talent challenges. Some need frequent fresh supplies of frontline workers who are quickly ready to serve customers. Others need seasoned engineers who can innovate in highly competitive, highly technical fields. Many need versatile global talent who can develop into the leaders of the future. And all need their talent to turn on a dime when events such as deep recessions and market upheaval change the rules of the game.
Based on our research into the various human capital functions that reside in companies today, we identified six key components of talent management:
- Recruitment (also known as "selection and assessment")
- Compensation and rewards
- Performance management
- Succession management (including succession planning)
- Engagement and retention
- Leadership development.
While the research identifies these as the major practice areas that come together to form integrated talent management in corporations today, that doesn't mean they are the only ones for your organization.
One contributor to our book, Wharton professor Cappelli, offers a logical way to think about what components to emphasize. "While talent management often focuses on managerial and executive positions, the issues involved apply to all jobs," says Cappelli. "Among the major subtasks within talent management are workforce planning, which estimates future demand; hiring (entry-level and lateral) and internal development and promotion, which are the "make versus buy" options for meeting demand; and succession planning, which brings the planning process down to the individual level."
A menu, not a recipe
When deciding what components of talent management to emphasize, the obvious and important choices for you will be the functions that will most quickly put the right talent in the right jobs at the right time for your organization. If it's disproportionately focused on top executives, key scientific jobs, or super sales generators, it doesn't matter, as long as it makes strategic sense and supports key business goals.
Despite our bias for the integrating role of learning and development, we aren't campaigning for the primacy of one component over another. While finding, developing, and keeping talent are common goals for many companies, most emphasize one component over another for reasons that make good business sense to them.
At 3M, for instance, where innovation is the lifeblood of the organization, there's a strong focus on engaging people and encouraging them to stretch. At Edwards Lifesciences, where CEO Michael Mussallem drives a culture of execution and accountability, talent management focuses strongly on succession planning to put at least two candidates in line for every key job. And at GE, the ber-incubator of leadership development in our time, the emphasis is on "judgment capacity" arrived at through industry-leading practices such as leaders teaching leaders and action learning. From Hertz's focus on rewarding knowledge transfer, to Cisco's linkage of performance plans to the CEO's vision, to Agilent's embrace of evidence-based HR, we can see the variety and complexity of talent management practices in today's corporations.
While similarities abound, every company is unique. Therefore, we're not strict constructionists when it comes to integrating processes, as long as you have one for stitching things together around the common goal of better performance. And that's what integrated talent management is all about: achieving higher organizational performance and workforce productivity through optimized talent management.
Here's how some of the authors featured in our book integrate their processes with other talent management efforts in other parts of the organization:
- linking skills uncovered in the recruiting process to the succession-planning process
- leveraging compensation plans to create a pay-for-performance culture
- enabling greater employee engagement for greater corporate innovation and less unwanted attrition
- embedding leadership expectations in recruiting and selection routines, improving them in career development and learning systems, and then rewarding and reinforcing them with performance coaching and incentives.
Agilent Technologies practices an integration so seamless that the words "integrated talent management" are not part of their vocabulary. "Those words are not spoken aloud at Agilent," says Teresa Roche, vice president and chief learning officer at Agilent. "And yet I absolutely know it is happening here. It falls under three drivers for the organization: set and align strategy, build organizational capability, and deliver results.
"Anything we do should be a part of work, not apart from it," says Roche. "A litmus test for us is whether the solution we provide delivers the results required in the Agilent dashboard, and if it is a distraction, we go back to the drawing board. Everything we do needs to be embedded in the business requirements, and nothing can stand alone."
Where to begin?
It makes an important difference where a company starts the talent management process. Leslie Joyce, vice president of global talent management at Novelis, says, "Hiring the right people makes developing the right skill sets so much easier. Hiring the right person sets the foundation for every talent activity that follows."
For the Hertz Corporation, a central learning and development question was how to build an employee development infrastructure that was not only an integral part of talent management, but also fully integrated within HR, and more importantly, linked with compensation and rewards.
"Learning and development plus compensation and rewards equals sustainable employee development for greater organizational performance," says Karl-Heinz Oehler, vice president of global talent management at Hertz. "Compensation and rewards inter-relates with almost every functional HR domain, but its relationship with learning and development is special. Adopting new behaviors can only be encouraged, implemented, and sustained if they are properly compensated and rewarded."
Performance management systems reside at the heart of many talent management efforts; in fact, research shows that it is one of the most integrated functions. "The existence of an effective performance management system is often the major differentiator between organizations that produce adequate results and those that excel," says Lawler, professor at the University of California's Marshall School of Business.
At Cisco, there is a belief that to get the true benefits from a performance system, it must become a business imperative, not just an HR process. Annmarie Neal, chief talent officer and director of the Cisco Center for Collaborative Leadership, notes, "At Cisco, we use scorecards that correlate executive performance assessments with other talent management decisions, such as calibration, promotions, and compensation."
Employee engagement and retention are two areas that are critical to successful talent management. As Kaye of CareerSystems International states, "Employee engagement has been elevated in many enterprises to the top tier of objectives, on a par with generating revenues and managing costs." A good example of linking engagement to top objectives occurs at 3M. Karen Paul, who leads global measurement for 3M, says, "Innovation, arguably 3M's most treasured asset, rests upon and is fueled by employee engagement. A company that develops and hopes to maintain a culture of innovation must, by necessity, actively manage and engage talent at all levels in the organization."
For these companies, and several others profiled in our book, integrated talent management isn't just a convenience, it's a competitive necessity.
As Ulrich, noted author and professor at the University of Michigan, points out, "Talent differentiates, drives productivity, determines customer service, and increases intangible shareholder value. Talent matters. Talent is too important to be left to uncoordinated events."
Whether leading an orchestra or an employee base, coordination of talent - each with unique but complimentary skills and competencies - is key to success. We hope that The Executive Guide to Integrated Talent Management helps every talent conductor create virtuoso performances worthy of frequent standing ovations.