“We can each define ambition and progress for ourselves. The goal is to work toward a world where expectations are not set by the stereotypes that hold us back, but by our personal passion, talents and interests.” Sheryl Sandberg
In every research article or corporate board report, the struggle to attract, identify, develop and retain critical skills and key talent is a key business risk and strategic priority. And yet a vast number of organisations acknowledge that their capability to implement intelligent and sustainable talent processes are still in their infancy and not very robust.
Need for talent
In the 2016 Bersin Deloitte Global HC Trends Report, 89 % of executives rated the need to strengthen, reengineer, and improve organizational leadership as an important priority. 28% of survey respondents reported weak or very weak leadership pipelines. The traditional pyramid shaped leadership development model is simply not producing leaders fast enough to keep up with the demands of business and the pace of change. The findings suggest that organizations need to raise the bar in terms of rigor, evidence, and more structured and scientific approaches to identifying, assessing, and developing leaders, and that this process needs to start earlier in leaders’ careers.
There is also a need to develop new evolving capabilities to cope and thrive in turbulent times, such as agile leadership, strategic responsiveness, cross boundary collaboration, leading multiple diverse teams, motivating cross-generational individuals, building change ready cultures, fast-tracking innovation and decision making, working in a globally competitive, transparent, digitally connected world AND managing health, personal effectiveness and energy.
It is well documented that differentiated investment in key talent results in significant benefits and reduces Human Capital risk. The key factors under risks and benefits are outlined in the diagram below
Key risks include retention risk, succession risk and transformation risk.
Retention risk: the recognised cost of loss of key talent Rand value is between 1 and 1.5x annual salary of the person concerned. (TCTC). This amount increases, the higher up an organisation you go and the more critical and scarce the role is.
Succession risk: there is significant cost to the business if a Mission Critical Position (MCP) remains vacant for more than a few months, or the MCP is filled with a person not fully ready to fill the role. Poor leadership or strategic and operational decisions can cost the business millions.
Transformation risk: These costs include the cost of non-compliance and not meeting BBBEE targets. Costs can include actual financial fines but also loss of business and loss of a future diverse pipeline of leaders that don’t feel like they belong in an environment that does not recognise their talent.
Key benefits of managing talent effectively include leadership and decision making, engagement and potential and resource security
Leadership and decision making: multiple studies have shown that key leaders and talent in high leverage positions can impact up to 70% of the organisation culture in their area of influence and a significant portion of individual and organisational performance.
Engagement & potential: Organisations that manage talent effectively tend to have more engaged employees. Employees that are highly engaged are 87% more likely to stay and organisations with a large percentage of engaged employees show 3-4 x more profit than those with less engaged employees.
Resource security: Ensuring a pipeline of key leadership and technical talent for the future reduces the cost of finding and developing talent in the long run. A culture of Innovation and learning, often brought about by high potential talent, not only engages and retains talent but creates products and services that contribute to the bottom line.
Typical talent identification
In many organisations where we asked to assess or develop their talent capability, “talent” is identified subjectively by manager’s sending a list of people they think should be assessed, participate in a leadership development program or fill their shoes as a potential successor. Criteria is vague or does not exist, and most often includes a track record of performance and attributes such as goes the extra mile, reliable, good leader or interested in higher level roles. Many managers without targeted training, will default to looking for mini-me’s that suit their personality preferences and lifestyle and that are easy to relate to i.e. similar interests of life experience. Unfortunately, this excludes a diverse selection of talent across cultural, racial, age and gender boundaries. It also tends to maintain the status quo of culture, ideas and performance, which a more rich and diverse group of talent might provide. In addition, past performance is not necessarily a good indicator of future performance.
A Corporate Executive Board Study (2014) reports that high-potential employees are seen as almost twice as valuable to their organisations as employees who are not high-potential. Organisations with stronger leadership bench strength show double the revenue and profit growth of organisations with weaker leadership bench strength. However, many high potential programs fail to deliver the right people due to focussing efforts on the wrong people who are unlikely to succeed. Only 15% of an organisation’s high performers are likely to be high potential. A strong track record of performance to date is the starting point and not the defining factor in what drives the success of employees in high-potential programmes. So what are the factors that determine future potential?
Definition of Potential
Potential can be defined as the capability (talent and underlying qualities) to move into more complex leadership or specialist levels in the organisation i.e. more complex in terms of decision making, geography, technical depth, budget, # reports, etc.
CEB considers the primary indicators of future potential as ability, aspiration and engagement.
- Ability can include leadership behaviours, cognitive potential and certain defining characteristics i.e. self-awareness and drive.
- Aspiration includes a unique combination of motivations and preferences i.e. fast paced environments that offer autonomy, flexibility, commitment, challenge and influence. Those who are more likely to achieve an executive position also tend to take initiative and responsibility, take calculated risks, push for results and invest in their own personal development.
- Engagement includes
- Current Engagement – a combination of past experiences with an employer (positive or negative) and their current experiences in their job, role and work environment
- Future Engagement – their future expectations about their job, career and employer
Nearly 60% of high-potential employees with high engagement levels have a high intent to stay – more than double that of high-potential employees with lower levels of engagement. It is therefore important to assess the likelihood of retention and the risk thereof.
Our experience has shown us that there are other factors to include:
Readiness of the individual to perform at the next level plays an important role in understanding potential. Readiness is the estimated amount of time it might take to develop the required experience and competence to perform at the next organisational level. Typically this is done through a person to level and role matching exercise, as well as an estimation of the person’s learning ability. It helps to have clear leadership and technical pipelines with performance and competence standards that makes person to level and role matching possible. HR systems can make the matching process effortless if all the person, role and competency matching aspects are accurately captured and regularly updated.
Also to consider in the identification of potential are mobility preferences and demographic risk factors such as age, race, gender and tenure. It is useful to know how many years away from retirement someone is, whether they would still consider a geographic move even with a stable family set-up, and how they might contribute to the Employment Equity and gender targets.
The table below show some key assessment dimensions and tools to consider when thinking about assessing potential
|READINESS||Person to next level match
A comparison of the current level of competence (knowledge, skills, experience and behaviour) with the future required competence at the next level – and how long it would take to develop to the next level in the current context.
|Role profile comparison
• Knowledge – qualifications
• Experience – # years, industry, function
• Skills – demonstrated skills
• Behaviour – demonstrated behaviours
• Est. # years to develop – linked to IDP
Learning ability can affect the pace of learning
Demonstrates willingness to travel extensively and/or relocate for the advancement of their career
|Talent conversation to explore the following questions:
• Willing to work for another division – Y/N – SA/Africa/global
• Willing to work in another geography – Y/N – SA/Africa/global
• Willing to relocate – indefinite time – Y/N – SA/Africa/global
• Willing to relocate – limited time i.e. 1 year – Y/N – SA/Africa/global
• Willing to travel – extensive i.e. 2 weeks a month Y/N – SA/Africa/global
• Willing to travel – ad hoc i.e. < 1 week a month Y/N – SA/Africa/global
• Any pre-requisites or preferences?
Factors that indicate a potential risk to the business of investing in the individual in the short-term. These factors must be carefully considered to ensure fairness is applied and assumptions are avoided
|Combine data with observable evidence to assess cost-benefit and risk of investment
• Age – potential to exit the organisation if close to retirement or very early in career wanting variety and flexibility
• Race – potential to exit organisation prematurely (based on EE statistics)
• Gender – potential to exit organisation or reduce working hours due to family commitments
• Tenure – if less than 2 years in organisation, no proven commitment yet, if many years in organisation and slow progression, may indicate a risk
These are a lot of factors to consider, assess and discuss for robust talent identification. Assessment of potential is best when it includes a combination of observable evidence, psychometric assessment, multiple and relevant feedback sources and robust discussion to weigh up the match of business requirements to individual preferences, aspirations and potential. Psychometric assessments can be expensive, so may need to be used only where the impact of the decision warrants the investment. In the absence of psychometric assessment, observable evidence against clear criteria can be used.
The challenge with talent identification is always that of subjectivity and comparable data. You will never be able to completely remove subjectivity, however you can follow a robust process with clear criteria and effective facilitation of talent forums and appropriate training for managers. The more exposure a manager has to understanding potential, competence and fair assessment, the more accurate and comparable the assessment is likely to be. Assessment of potential is not a once-off exercise and should be reviewed regularly to cater for people changing and growing. It is well known that Leadership Competence and Emotional Intelligence can be developed, depending on the amount of effort a person puts into their learning process. Avoid “boxing” people at any stage in their career and always give the benefit of the doubt and test the evidence you may have.
A strategic talent review of peers is more likely to consider multiple factors and views than a manager only assessment. Our best and most accepted talent identification results follow a rigorous process of building capacity with executives on how to facilitate meaningful talent conversations, interpret psychometric reports, complete an accurate competency review and participate in robust debate in strategic talent reviews or forums in order to consider the investment required to accelerate development and readiness in certain high potential talent. Whilst this may feel time consuming, it is a critical strategic priority. Talent needs to be seen as a strategic asset that with the right short and long-term investment will deliver an excellent return
CEB Talent Report 2014: Improving the Odds of Success for High-Potential Programmes
Bersin Deloitte Global HC Trends 2016