Putting Talent Before Finances
Why organizations need to focus on people to define success.
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In all the chaos of daily routines, we sometimes forget that a company's performance is only as solid as the performance of those doing the work. It's simple - a company's single-most impactful competitive advantage is the quality of the people behind the work.
According to a 2018 McKinsey Global Survey, there is a significant relationship between talent management - when done well - and organizational performance. According the survey, 99% of respondents reporting effective talent management strategies say that companies with strong talent management practices outperform their competitors.
Prioritizing a Talent Agenda
Imagine, for a moment, that each manager had autonomy to define the company’s services and sales price. It would be chaotic. That same autonomy can create talent chaos. Allowing individual managers to define talent management will miss the mark if the desired outcome is a high performing organization.
Too often, individual manager personal experiences and bias guides talent development. Rather, companies must start with creating a talent philosophy which clearly defines performance expectations, financial investment and manager accountability in talent development.
Without a documented, defined and accepted philosophy, managers are free to decide what rules, expectations and behaviors are necessary to achieve high performance. Those Individual ideas and preferences can create significant variation in the quality, depth and engagement of talent and the variation can negatively impact business outcomes.
How to Create a Talent Philosophy
According to Karen Power, Founder of Power HR Consulting and former Senior Vice President, Talent for Novant Health, you need to start at the top to make sure you clearly understand your CEO’s perspectives.
“You must have conversations with each member of the executive team where you document their individual preferences about performance, accountability, transparency, differentiation, behaviors and development,” Power says. “After you aggregate the information and develop your executive summary to share the collective data, you will facilitate your executive team through discussion around each of the elements above. Don’t expect full consensus. Your job is to lead them to alignment and gain their commitment to the philosophy. Capture the aligned direction, commit to drafting the philosophy statements to bring back, and work with them to refine those. Your philosophy should clarify for all what it takes to succeed in the organization.”
Ms. Power, who led her former organization through a development process, states “it may take a few work sessions to get there, culminating in a final presentation to share the finished Talent Philosophy, as well as a draft plan for rolling it out to the rest of the organization. Identify in the communications plan where each of the executives will take the lead, then get their commitment to do so. After all, they have just determined how talent will be built and managed in your organization… ownership starts there. Without executive commitment, the rest of the organization will not follow.”
Alignment and Adherence to Talent Philosophy
It continues at the top, and the expectations are set with shared accountability held throughout the organization. A company’s CEO must discuss talent with the same fervent regard as market share, stock prices and strategic plans.
Even the U.S. Securities and Exchange Commission (SEC) is reinforcing the importance of talent capital. It recently adopted new Human Capital Disclosure Requirements for public companies reporting/listing on the U.S. exchanges, opening a new era of human capital reporting and disclosure. Public companies will be required to describe in more detail how human capital impacts their business results, including human capital risk factors they have or in the future could be expected to have a negative impact on the company.
The CEO needs to keep talent on their agenda and engage in deep and thoughtful discussion with the executive team. In a cascading fashion, each executive should do the same, and the discussion should include a review of performance, capability gaps, development and talent planning.
The organization’s leadership must apply the same rigor and discipline in supporting its talent philosophy as it does in managing the financials. Just as it is unacceptable to not meet budget, it should be unacceptable to not support a stated talent philosophy. Every decision about talent management in your organization should be guided by it.
A talent philosophy has to be embedded in organizational and HR practices and programs that drive talent activities such as hiring decisions, onboarding, performance management, talent assessment and succession planning. People policies, programs and strategies should reinforce it. This requires an in-depth analysis, evaluation and roadmap for the necessary changes.
At the end of the day, innovation, excellent service, problem-solving, and product development come from talented people, not a financial statement. Positive financial statements are the result of the talents of the organization’s people. Top organizations embrace the importance of their people and understand that talent is not only a competitive advantage, but a competitive imperative that directly drives financial performance. CEOs, CFOs, and anyone in the c-suite needs to prioritize the talent agenda.
Talent Management: A Guide for HR
Talent management continues to be one of the top focuses for HR departments all over the world. Why? It is a commitment from an organization to recruit, hire, retain, and develop employees. In our guide, the HR Exchange Network explores the topic in more detail, looks the current state of affairs, strategies, why you should invest in talent management and provides a forecast into what to expect in the coming years.
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