A new lens Re-examining development strategies for greater talent optimization.
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Introduction The underutilization of human capital creates a pernicious drag on performance.
Today’s business challenges have pried open new talent gaps: there are not enough people with the requisite skills to meet organizational needs. In this new context, the traditional talent development systems fall short. A new lens is required: one that assumes that each individual is capable of contributing more, and that can be tailored to the individual to make that happen. In today’s knowledge-based economy, excellent employees are a singular competitive advantage. Studies show, for instance, that companies with the highest levels of employee engagement outperform competitors with lower levels by 72% in terms of earnings per share (Harter et al. 2010). And yet, many companies aren’t getting a healthy return on their investment in employee talent development—and they know it. In a 2013 survey by the Conference Board, 90% of CEOs, presidents, and board chairs of global companies cited human capital issues (the need to grow talent internally, provide employee training and development, raise engagement, improve performance management, and retain critical talent) as their top challenge. At the same time, talent is simply walking out the door—some of it at a faster rate than others. Millennials, for instance, are the demographic most likely to leave a company, and they specifically cite lack of career development as a primary reason (PwC Saratoga 2012). Another pattern of attrition plagues many organizations as well: the number of women or people of color declines proportionately as you look up the organizational ladder—both from deceleration in promotion rates and an increase in turnover (see Figure 1).
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A NEW LENS
Figure 1 Percentage of women and people of color drops at higher levels of management. Research by Global Novations, now part of Korn Ferry, shows that the percentage of women and professionals of color falls steeply at the manager level and above—because of both reduced promotion rates and higher rates of departure.
Staff levels 1-2 Senior Staff Manager
42%
31%
Rates of promotion
New hires
Departures
45%
21% 27%
31%
28%
Principal, Executive, Director
16% 11%
7% 5%
9%
14%
10%
29%
38%
Senior Manager
28%
9%
18%
Each of these gaps signifies an underutilization of human capital and a pernicious drag on performance. In quick, complex, competitive business environments, more people must be moved into bigger jobs and given greater challenges earlier in their careers. Because of insufficient development, however, there are too few “go-to” employees to shift into leadership or to hand formidable projects. The need for top-flight talent seems endless, and yet a failure to expand the talent-development pool and staunch the outward flow of employees hinders companies’ competitiveness and ability to grow.
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What continually bores such holes in talent optimization strategies? Many organizations have two underlying issues: Underestimating the value contributed by the “vital many.” Many organizations fail to find the optimal balance of investment between high-potential leaders and the vital masses whose contributions are also essential to the success of the company. Although developing future managers and executives is crucial, an overemphasis on that segment of the workforce means too many individuals plateau at levels of contribution far below what they could deliver. Using a one-size-fits-all approach. Many companies make the mistake of thinking that a single method of talent development will work for everyone, even as the workforce becomes more diverse and global. Additionally, when that one-size-fits-all development system falls short, the liability is assumed to be the employee’s. Instead, organizations should evaluate how to alter or improve the talent development system so that it meets individual needs. Truly optimizing talent requires a new, wide-angle lens—one that assumes that each individual is capable of contributing more (see Figure 2). In key respects, this new view is the organizationwide expansion of best practices from diversity and inclusion programs that succeeded in bringing underrepresented groups into the corporate fold. Those practices are more broadly needed as companies globalize, workforces become more diverse, and development must be accelerated for everyone. Figure 2 The wide-angle lens on talent optimization. The move to developing across the talent spectrum requires dramatic shifts in thinking, approach, and strategy.
Standard lens
Wide-angle lens
Who has potential for top leadership roles?
How can the organization get more value out of its talent?
Guiding principle
Some have “it”; most don’t.
Most people are capable of greater contributions.
Strategy
Identify limited few; focus narrowly on preparing them for upward mobility.
Expand contributions at all levels; select approach based on needs/interests.
Focus
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Opportunity is not a zero-sum game. Research findings on job performance drivers are clear: with deliberate practice and feedback, most employees can contribute more at work. And yet companies repeatedly tap the same individuals for the difficult assignments. Organizations can no longer afford to expect great things from some employees and have lower expectations of others. Organizations may understandably struggle with how to spread development opportunities around. But development is not like a year-end bonus: there is no limit to the amount available, particularly once an organization begins to view development through this wideangle lens. Development can be anything that requires individuals to stretch their capabilities, leave their comfort zone, make new connections, or solve new problems. Under this definition, every organization possesses an expansive list of developmental assignments. The key is to match the right individuals to the specific challenges. Depending on a person’s current capabilities, a task, project, or role may provide a great deal of development, or none at all. Managers also must provide support and feedback so that individuals learn from their experience. Companies already are making a similar shift in customer-facing parts of the business. In marketing, sales, and client services, the needs and desires of individual customers—not groups of customers—are central to maintaining fast-eroding customer loyalty. Indeed, the very notion of market groups is fading. Large and small, B-to-B or B-to-C, all companies are finding that they must engage with customers on a focused and specific level to achieve desired outcomes. The same thinking now needs to be turned inward: not all employees are the same, no matter how refined the grouping. If businesses hope to compete with their talent, they must ask what each person needs in order to make a greater contribution. And if individuals are not enhancing their contribution, companies need to ask themselves, “What do we need to do differently?”
Development can be anything that pushes people to stretch their talents, leave their comfort zone, or solve new problems.
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Strategies for talent optimization. When its organizational philosophy emphasizes widespread capacity-building, a company is positioned to create a culture of development for every employee. We have observed that best in class companies optimize their talent by using the following approaches: Get the facts first. To start, senior leaders must perform quantitative and qualitative analysis of their talent development—its verified successes and evident shortfalls. Research company Aberdeen Group reports that best-in-class companies make such human capital data available and transparent to managers, in the same manner as financial data, to inform people and process decisions (Lombardi and Laurano 2013). Leaders must ask tough questions and objectively scrutinize the data at both the organizational and individual level. For each area of the company, what are the rates of retention, promotion, productivity, innovation, morale, or employee engagement? Why are there discrepancies? Likewise, what is feeding an individual’s success? What gaps in experience or confidence level need to be addressed to accelerate their momentum? When these questions come from a place of curiosity, rather than judgment, the individual, the manager, and the head of talent can better understand what’s needed and craft approaches for improvement. Set expectations and measure outcomes. Everyone needs to know what’s expected—of individuals and the whole organization— which means setting specific goals and measuring results. One of the most effective ways to enable individual development is to use a simple, accessible, and practical competency model—one created in the language of line managers and tied to the data about what contributes to success. Competency models facilitate clear discussions about current strengths and the specific opportunities that lie in a development experience (Orr, Sneltjes, and Dai 2010). What is the vision for success and how will the organization know it is making progress? The goal might be of increased profitability or enhanced skill sets, higher engagement scores or increased retention. However it’s measured, the goal needs to focus attention and effort on growing the contributions of every member of the organization— and make it clear that it is everyone’s responsibility, managers and direct reports both, to work together toward that outcome.
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Train managers to be talent managers. Senior leaders at best-inclass companies hold line business leaders responsible for talent management within their teams (Lombardi and Laurano 2013). In this way, every manager becomes a talent manager. Managers will have to provide regular feedback and coaching to those stretching into more demanding responsibilities (and they may need initial coaching and guidance themselves). It’s best to target one skill or behavior at a time: a Korn Ferry study demonstrated that a development process that identified specific behaviors for improvement and provided targeted coaching resulted in the most significant progress. It is vital that managers provide support after a failure too, when individuals are most vulnerable to doubting themselves or being doubted by others. Failure and difficulty should prompt an analysis of what needs to be done differently in the future—not a withdrawal of support or appropriate stretch opportunities. When senior managers model this development approach (clear standards and strategic stretch opportunities coupled with coaching and feedback) and take it as their job to help their entire staff contribute at higher levels, they will set a standard that will flow down from their direct reports to middle and frontline managers. Develop influence and relating skills. Research and the observations of astute managers make it clear that technical skills alone are not sufficient for expanding one’s value in the workplace over time (Dalton and Thompson 1993). It takes influence and relating skills to get good ideas heard and accepted (See Figure 3). Too often, managers mistakenly consider these interpersonal skill gaps as innate—a trait some people (and some groups) just naturally have. As a result, they offer little coaching or mentoring around relating well to others or building influence. Those are, however, learnable skills when organizations focus on teaching them. Just as when developing any other ability, individuals must be given clear expectations, guidance and coaching, opportunities to exercise the skill, and feedback to refine their efforts.
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Figure 3 Types of confidence contributing to career success. A workforce survey of a global financial services company with 40,000 employees found that one’s confidence in their influence and relating skills were judged to be more important than technical skill to advancement.
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Technical skillls
Influence skills
Relating skills
Match individuals to challenging assignments. Korn Ferry’s 70/20/10 approach to development is based upon research that demonstrates that 70% of knowledge comes from on-the-job experiences (Lombardo and Eichinger 2011). Structure assignments that are incrementally more challenging and targeted to build skills that will increase contribution. Individuals who are placed in job assignments strategically are better prepared for higher levels of responsibility than those who are left to “figure it out” on their own (Hallenback, Gupta, and Orr 2009). Monitor the development process to make sure that some individuals aren’t subject to longer proving periods or extra scrutiny based on negative stereotypes or the stigma of an early failure before being given their next challenge. With an understanding of the dynamics that drive or inhibit an individual’s development, an effective series of job challenges can be engineered for each person.
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Conclusion How do we improve the return on investment in talent? Especially as the workforce becomes more global and diverse, organizations need to focus simultaneously on the micro and the macro. They must consider all talent worth development effort, and recognize that each person can increase his or her contribution. At the same time, development must be more tailored to individual needs to produce better results. Any assumption that there can be a “one-size-fits-all” approach to talent development means an organization will fail to capitalize on the potential of every member of its workforce. Companies intent on developing individuals, however, will have a deep bench of diverse talent to deploy. The holy grail of talent management has always been having the right resources at the right time. By starting from the assumption that all employees can be a “right resource,” organizations will optimize contributions from the broadest base of talent.
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References Conference Board. 2013. “The Conference Board CEO Challenge® Summary Report: Countering the Global Slowdown.” New York: The Conference Board Inc. http://www.conference-board.org/ publications/publicationdetail.cfm?publicationid=2404. Dalton, Gene W., and Paul H. Thompson. 1993. Novations: Strategies for Career Management. Waltham, Mass.: Novations Group. Hallenback, George, Pushp Deep Gupta, and J. Evelyn Orr. 2009. “Getting Started with Assignmentology.” Minneapolis: Korn/Ferry International. Harter, James, Sangeeta Agrawal, Stephanie Plowman, and Jim Asplund. 2010. “Employee Engagement and Earnings Per Share: A Longitudinal Study of Organizational Performance.” Washington, DC: Gallup. http://www.gallup.com/strategicconsulting/157199/employeeengagement-earnings-per-share.aspx. Lombardi, Mollie, and Madeline Laurano. 2013. “Human Capital Management Trends.” Boston: Aberdeen Group. http://www. aberdeen.com/assets/report-preview/8101-RA-human-capitalmanagement.pdf. Lombardo, Michael M., and Robert W. Eichinger. 2011. The Leadership Machine, 10th Anniversary Edition. Minneapolis: Korn/Ferry International. Orr, J. Evelyn, Craig Sneltjes, and Guangrong Dai. 2010. “Best Practices in Developing and Implementing Competency Models.” Minneapolis: Korn/Ferry International. http://www.kornferryinstitute. com/reports-insights/best-practices-developing-and-implementingcompetency-models. PwC Saratoga. 2012. “PwC Saratoga’s 2012/2013 US Human Capital Effectiveness Report: State of the Workforce.” New York: PricewaterhouseCoopers. http://www.pwc.com/en_US/us/ hr-saratoga/assets/pwc-saratoga-human-capital-effectivenessexecutive-summary.pdf.
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About the author Michael C. Hyter Senior Partner Korn Ferry Leadership and Talent Consulting Workforce Performance, Inclusion & Diversity practice michael.hyter@kornferry.com
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About Korn Ferry At Korn Ferry, we design, build, attract and ignite talent. Since our inception, clients have trusted us to help recruit world-class leadership. Today, we are a single source for leadership and talent consulting services to empower businesses and leaders to reach their goals. Our solutions range from executive recruitment and leadership development programmes, to enterprise learning, succession planning and recruitment process outsourcing (RPO).
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