September 2009
Talent Strategy
Volume 1, Issue 2
Published by Business Intelligence for talent professionals. To register for your free copy, go to : www.business-intelligence.co.uk
The real business of talent management A number of themes run through the articles in this issue: the need for a harder-nosed approach to talent management, the role of the CEO as chief talent officer and success factors for the head of talent. Our interview with Marc Effron, Avon Products’ VP of talent management, makes it clear that he champions a production-line approach to deliver what the business needs – and has no time for a ‘molly-coddling mindset’. In much the same vein, the case for applying competencies based on statistical evidence of superior performance as the means for recruiting and developing talent is outlined in “how to identify the competencies that count”.
for adding business value through talent leverage. There are also some suggestions for what makes for a successful head of talent – based on feedback gathered through the New Talent Management Network and Marc Effron’s own talent management experience. Finally, for those who want to ensure that talent strategy is aligned with the needs of business in a changing world, there is a glimpse of the future in Time to rethink talent strategy.
Leveraging talent at LSG Sky Chefs (P4) Integrated talent management trends (P8)
Time to rethink talent strategy
Changing economic, environmental and social conditions call for a transformation in the way businesses operate and put a premium on corporate sustainability. It will
Talent and the sustainable business (P1) Evidence-based competencies (P3)
Some equally tough talking is found in the case study on LSG Sky Chefs where Simon Middleton, an advocate of competency-led performance improvement, gives his recipe
According to Tomorrow’s Global Talent, a new report from the Tomorrow’s Company ‘think-and-do’ tank, it is time to relaunch talent management to meet today’s business needs.
How Avon applies talent management (p7)
take ingenuity, new ideas and a contribution from people at all levels of the organisation to develop this new model.
Avon’s Marc Effron - interview (P7)
What’s more, say the authors, the current economic mess, has its roots in leadership and management practices that are well past their shelf life. “We believe this means that companies should think afresh about what they mean by ‘talent’.”
In this issue: Rethinking talent strategy - 1
LSG Sky Chefs – 4
Marc Effron Interview – 6
Competencies – 3
Bonuses, Tweeting and Leaders – 5
Integrated talent management – 8
In place of the legacy concept that equates talent with high fliers destined for C-suite roles, “…talent should be seen as all of the individual and collective capacities to generate sustainable value that exists in the workforce,” says the report. Instead of regarding talent as a scarce resource, think of talent abundance waiting to be tapped throughout the organization, urges the report.
Tomorrow’s Company’s vision is “a future for business which makes equal sense to staff, shareholders and society.”
This new talent mindset and philosophy will need to be grounded in practice. “The company’s definition of talent will depend on the changing opportunities and challenges it faces. So talent is not an absolute quality. It depends what it’s needed for. It is defined as much by the nature of the demand for it as by the nature of the supply.”
How companies could manage talent under this new regime is reflected in its model of old v new style talent management. As for who should be responsible, the report proposes that there is only one candidate for chief talent officer: the CEO. Tomorrow’s Global Talent is the first phase of a continuing programme of research and debate in this area which Tomorrow’s Company says will explore answers to these and related questions. To download the report, go to: www.tomorrowscompany.com/
“talent … all of the
individual and collective capacities to generate sustainable value.”
Source: Tomorrow’s Global Talent, Tomorrow’s Company 2009
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How to identify the competencies that count Competencies are in danger of suffering the fate of other richly promising management techniques. Popularized, simplified and misunderstood, they have often been diluted to the point where they prove sceptics who doubt their value right. Geoff Ryan, European representative of Competency International, believes that companies are missing a golden opportunity to improve the effectiveness of new hires, promotions and talent development. “Competencies can be highly effective predictors of future performance when they are based on hard evidence,” he says. The problem lies not with the concept, but its application. Generic competencies, or poorly validated competencies, will guarantee disappointment. Establishing specific relevance and proving their validity are the only ways to reap the pay-off from competencies, according to Ryan. It takes a rich source of financial performance data married up with key competencies in pivotal roles to tease out their role in individual performance. Deciding where to apply this analytical technique, therefore, calls for some careful thinking. While competencies are relevant to every job, some jobs are far more critical to the organisation than others. It comes down to answering a simple question: “Who are the ones who really make the money for us? These people are not always the managers,” says Ryan. To make certain they are focusing on the key roles, organisations need to be sure they have a sound model of performance. The task starts with isolating the drivers of performance at corporate level, either through a balanced scorecard project or a similar strategic programme, before drilling down to individual roles. “You’ve got to dig deep into specificity about success factors in your
organization,” says Ryan. “You’ve also got to do the statistical analysis to show which competencies account for differences in performance.” There is evidence that applied in this way, competencies can lead to performance insights and breakthroughs. LSG Sky Chefs, the leading in-flight service company, has dug into the competencies/financial data link and learnt how to steer performance improvement.
“Who are the people who really make money for? It’s not always the managers.”
First of all, it set about discovering the role played by competencies in determining the success of one of its core groups, the general managers responsible for the centres that deliver in-flight service, dayin, day-out to the airlines. Using a critical-incident interview technique, the company studied a number of top-performing managers to isolate the competencies that made the difference. Next, by analysing financial results against managerial contribution, it found that competencies accounted for approximately 40% of the variance in general managers’ EBITDA performance. Plotting a number of years’ financial data against managerial contribution predicted that capturing 10% of the value added by key competencies would generate 6% uplift in performance EBITDA. “Competencies mean that you can have a much more scientific approach to HR and performance,” says Ryan.
LSG Sky Chefs – identifying competencies that make the difference
There are hundreds of competency models on the market, as well as webbased tools for identifying competencies in a particular role. “Some popular off-theshelf questionnaires only explain about 10% of the variance in financial performance,” claims Ryan. There is, he claims, no short cut to getting to the heart of competency-driven performance in an organisation.
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“This is an opportunity to take a more financial, statistical approach to raising performance.”
Once the key competencies have been identified for the money-making roles, they can be used for identifying other high-fliers, recruitment and for improving the performance of B performers. But not overnight. “People must be prepared to change the way they think and act,” says Ryan. Given the motivational will, there are ways of nurturing competencies although it can take months of training and practice. The business case, though, for investing the effort to move an organisation’s performance towards superior performance defined as one standard deviation above the mean can, as LSG Sky Chefs, concluded be substantial.
it because they get detailed feedback about themselves.” There is also the cost of not applying this kind of approach. “All too often HR can reduce rather than add value to the organization by relying on the use of instruments that have not been validated specifically within their organization. This is an opportunity to take a more financial, statistical approach to raising performance.” For more information: www.competencyinternational.com
Although the work calls for sustained effort, it has, in Ryan’s experience, never been fruitless. “The worst case risk is that we could carry out all the interviews and analysis and not find a set of independent variables (competencies) that account for high performance,” he says, “but that has never happened. When we have hard data, it always works. And individuals like
It’s all about talent leverage for LSG Sky Chefs
“The real challenge is leveraging the talent you have.” Simon Middleton
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Simon Middleton, Corporate Senior VP, HR, LSG Sky Chefs prefers the term ‘talent leverage’ to ‘talent management’ because, in his view, talent is represented by those who • make a discernible difference to the culture, well-being and performance of the organisation • build a sustainable enterprise from which value, not only profit, emerges • occupy key roles that make a measurable difference to the financial performance • are highly accomplished in their work. “You have to accept that leveraging talent involves running a hard and soft system,” Middleton says. “It’s complex. A good indicator of whether a person is a ‘talent’ or not is the company’s willingness to abandon its usual policies and procedures to accommodate individual needs.” He adds these points. • Devising a talent strategy means answering this question – what does meeting our strategic goals involve in
terms of organisation and people? On one particular talent issue he is adamant, believing that the notion of a ‘war for talent’ is both misleading and inappropriate. “Most companies are so poor at managing people there’s no need for a war! The real challenge is leveraging the talent you have.” For more information A detailed case study of LSG Sky Chefs work with competencies is included in Creating the Talent-Driven Business (more details at www.businessintelligence.co.uk)
Talent attraction and retention justifies banking bonuses Notwithstanding government, public and shareholder outrage about bonuses in the financial sector, the banks swear that they cannot do without them in the battle for top talent. A spirited defense of the practice has been mounted by John Varley, Barclays’ chief executive. Unveiling the bank’s £2.98 billion in profits for the first half of 2009, he made it clear that bonuses were key to keeping talent. In an interview with BBC’s Robert Peston, he maintained that they were essential if the bank was to retain star performers. "There is simply no higher priority that to ensure we field the very best people. That in a sense is exactly the same as a football manager if they are going to win,” he said in an interview commenting on the
bank’s results. “Our obligation is to ensure we pay appropriately." Less than a year after the UK government poured an estimated £1.2 trillion into the banks, politicians have expressed their dismay with the bonus culture, not least because it is seen as a major contributor to the financial crash. While Barclays is one of a handful of banks to get by without a Government handout, the bank’s decision to perpetuate the bonus practice will worry those who fear that nothing has been learnt from recent events. It also raises bigger questions about attracting and retaining talent and the part played by cash performance incentives.
“Our obligation is to ensure we pay appropriately,” John Varley on bonuses and talent
Tweeting can help to woo new recruits Twitter could help you reach new talent. According to John Cunningham, director of business markets at ntl:Telewest Business, it is one way of finding good people. In a Management Today article, he identifies recruitment as one of ten business apps for the free social networking service. It brings word-ofmouth into the cyber era.
different sets of followers who may have remained previously untapped.”
“Not only can you ‘tweet’ your vacancies,” says Cunningham, “but people will also 're-tweet' (forward around your message to their 'followers') your requirements amongst their friends and contacts - spreading your message to
For more information http://twitter.com/johnpc
Along with other social media phenomena, Twitter has developed a huge following. Currently, it is the fastest growing member-community network on the web with something over 55 monthly visits.
“Not only can you ‘tweet’ your vacancies but people will ‘re-tweet’ your requirements.”
Legacy of poor leadership development handicaps recovery Two thirds of the 147 respondents who took part in a Lee Hecht Harrison survey at the July 2009 Society for Human Resources Management Annual Conference and Exhibition said there was a lack of strong leadership in their companies. Underlying this was a lack of investment in leadership development before the recession. In line with this finding, 61% felt strongly that their
company’s leadership is not well prepared for the economic recovery. Also, 40% reported a decrease in their company’s investment in the development of key talent during the economic downturn. For more information www.lhh.com/
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How to excel as a talent manager – An Interview with Marc Effron, VP Talent Management, Avon Products “We need to approach talent management as if it were a factory with a production line pushing out people to standards we’ve been given by general management.”
Marc Effron, VP Talent Management, Avon Products
Career Highlights Founder, in 2007, of New Talent Management Network Started and led the Global Leadership Consulting Practice at Hewitt Associates Senior Vice President, Leadership Development for Bank of America, Director of Organization Effectiveness and Learning for Oxford Health Plans,. Previously a political consultant and a congressional staff assistant. Worked for, or consultant to, Citigroup, Philips Electronics, Reliance Industries (India) and Alcoa. Books: One Page Talent Management: Building Better Talent Faster with co-author Miriam Ort of Pepsico, (Harvard Business Press, early 2010). Co-author Leading the Way, co-edited Human Resources in the 21st Century and a M.B.A. with honours from the Yale School of Management.
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That is how Marc Effron, VP Talent Management, Avon Products and founder of the New Talent Management Network, sees the challenge for talent managers who want to succeed. Well aware that this may jar with the softer school of talent-development thought, he has an equally brisk message for those in this camp. “There is a need to move beyond the molly-coddling mind set.” Having started life as a political consultant in South California, Effron retains a keen awareness of what it takes to win friends and influence people. If talent managers are to earn their place at the corporate table, he believes that they must find ways of gaining the trust of operational managers. That means accepting that devising bureaucratic or overly academic approaches and trying to force them on to line managers is not the way to achieve this goal. For a significant proportion of the talent management community, this will involve a significant shift in attitudes and behaviour. Ho w tale nt ma nage rs can excel The NTMN provides Effron with a unique window on the current state of talent management – the network is an association of practitioners prepared to exchange views and experience knowing that there is no hidden commercial agenda. These insights, added to the lessons he has learnt from his own consulting and corporate career, has led Effron to conclude that to be effective, a head of talent management needs to play by the rules of the game. • “The head of talent must know the business well. That means being able to pull apart a balance sheet, knowing what goes on the factory floor, understanding
brand values, what goes into the product and so on.” • “I’d go further. You have to love business, that means buying into the capitalistic ethic. You need that focus on making a dollar – that’s what matters to managers you talk to in the business.” • “You also need executive presence. That means being able to speak in business language, in terms that executives understand.” • “Technical competencies are also important, but these can be learned when these other qualities are present.” Currently, there is a big gap between the actual and ideal. Effron has found that many talent managers flunk the first crucial test. “At least half of all talent managers do not know the business well enough.” Tale nt ma nage me nt o n tria l The reason why this matters is that there is widespread dissatisfaction with talent management practice. Significantly, corporate paymasters are not the only ones who are aware that performance has to be improved. “Talent management practices aren’t providing the returns expected by corporate leaders or TM practitioners,” concluded NTMN’s second annual survey. It also revealed that there is an urgency to get talent management on track. A surprising finding was that companies were prepared to maintain, even increase, their investment in talent management, despite the economic downturn. At the same time, there was a clear warning that talent managers are on probation. Senior management is prepared to give talent management the benefit of the doubt for now. But they are impatient to see results from their investment. Meas ure s o f s ucce ss A nagging suspicion is that those at the top have overblown expectations of what can be achieved. It is equally possible that
talent managers have failed to deliver their part of the contract. Both explanations are flagged up by the NTMN survey. So what does Effron think? “It is a mix of the two,” he says. “Executives who are not happy with the state of talent in their organisations need to look at how they organise talent management. But talent managers are selling a product or service and if line managers are not happy with what they are getting, they need to listen.” He clearly feels that it is down to talent managers to take the initiative and ensure they operational managers are satisfied with the service they receive. “We need to be the first out of the gate to make sure that managers love what we do.” Ensuring that the fundamentals of the talent management/business relationship are right is a start. Another essential is to make sure that talent management adds value to the business. “There are two key measures of success,” says Effron. “First, talent quality – do we meet the functional needs of the organisation, does talent conform to behaviours and values?” “Second, talent depth – are their enough people available to fill roles? So when we need a new general manager, is one available?” The C EO as chief tale nt o ffice r He is also the first to acknowledge that sponsorship from the top makes a huge difference, an advantage he enjoys in his current post. Andrea Jung, Chairman and Chief Executive Officer of Avon Products, acts as a talent management ambassador, educator and active supporter.
she practices the talent processes she recommends including performance reviews and models leadership development for others.” This has been key to helping Avon align talent management with the needs of the business. ”We’ve built most of the processes we need – unlike many other companies,” says Effron. Returning to the prospects for talent management on the larger corporate stage, Effron believes that the next big test is for talent managers to pass the test as trusted partners: “If you are seen as a co-leader in the business, you know that you are succeeding.”
Andrea Jung, Avon Chairman and CEO – talent management sponsor
Many will find this a big stretch if NTMN findings are indicative of the state of the art industry-wide. marc@newtmn.com www.newtmn.com Talen t M an age me nt at Avon Pro du cts • TM is part of HR and reports to the head of HR. This is mirrored in the regional structure of the company. • TM covers a quarter of the 40,000 workforce from manager level upwards. • TM responsibilities include succession planning, BPM, OD activities, engagement, training and development. • Talent Review Process is the engine of TM – rolls up from manager to executive level. Conducted twice a year. Every manager is positioned on a Performance and Potential Grid. Based on this assessment, we make decision to invest, or put in Hi-Po groups. • Avon believes in experience-based development – putting people in the right jobs where they will learn the most, and be subject to the right degree of stretch. • The company has an 80:20 grow-to-buy policy. • A focus on mission-critical capabilities development rather than developing individual leaders.
“… talent managers are selling a product or service and if line managers are not happy, they need to listen.”
“Our CEO is an incredible sponsor of our talent work, a huge believer in investing in talent. She talks about talent to the business and is also a great role model –
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Trend to integrated talent management gathers pace T alen t S tr ategy www.businessintelligence.co.uk Phone: +44 (0)208 971 3265 E-Mail: David.harvey@businessintelligence.co.uk
In the October issue of Talent Strategy: The trouble with talent management software Leadership lessons from the recession Retention – the next battleground Mentoring for tomorrow’s top performers Plus research ideas and smart ideas To find out more about the New Talent Management Network:
marc@newtmn.com www.newtmn.com
More companies are giving responsibilities for talent management activities to a single executive. According to research by Bersin & Associates and Human Resources Executive magazine, 31% of 773 respondents said their companies had done so in 2009, up from 22% in 2008. Other findings include: • Nearly 50% are implementing strategies for integrated talent management • Forty percent said performance management was their top priority for the coming year. • About half of respondents widely use employee development plans and only 8% said these were effective • Performance management systems
are used by 60%, career/succession management systems by over 30% - a significant increase considerably over the last year. The findings also indicate the business value of effective talent management: • Average revenue per employee is 26% higher • Staff turnover among high-performing employees is 41% lower and overall voluntary turnover is 17% lower • These organizations were 28% less likely to have experienced a major layoff (workforce reduction of 10% or more) between 2008 and 2009. For more information about the 2009 Talent Management Factbook, www.bersin.com
About Talent Strategy Talent Strategy is published by B usiness I ntelligence , a trading name of Optim a Publishing Ltd, publis hers of Creating the Tale nt-D riven Bus iness and ot her strategic HR and per for mance -impro veme nt researc h repo rts. The p ublisher welco mes suggestions for case studies, news, press releases, resea rc h, analysis on all aspects of talent ma nage me nt. Co ntact david-harvey @busi ness-intel ligence.co. uk Advertising in Tale nt Strategy Talent Strategy is an ideal c ha nnel for tale nt manager re crui tment or pr omotio n o f talent mana geme nt softwa re and ser vices. Call +44 (0) 2 08 971 3 265 for details www.b usiness-i ntelligence.c o.uk
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