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A Challenging Time for Talent Management

In an era of heightened employee mobility, hybrid work environments, and a skills shortage, the idea of matching great talent with critical roles may not be new, but it is more essential than ever.
This article is part of my FY24 Strategic Outlook series.

One of the most challenging aspects of management is balancing long term success with the need to survive the next quarter. There is, as with so many things, the opportunity of a virtuous circle. This happens with organisations who are led by strategic thinkers. Paul Polman is one such luminary who took the step of moving away from the focus on quarterly reporting when he took over at Unilever:

Immediately, the Dutch-born Polman put his shareholders on notice. He declared that they should no longer expect to see quarterly annual reports from the company, along with earnings guidance for the stock market. Unilever, he explained, was now taking a longer view. The CEO went a step further, urging shareholders to put their money somewhere else if they don’t “buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable.”

Forbes

The move was courageous, though unlike most of us he was in a unique position to pursue such dramatic reform — being both a CEO and at a commanding inflection point in his tenure. As he would later recount: ‘I figured I couldn’t be fired on my first day’.

For those of us further down the pecking order, where we do not have the same levers to pull as a CEO and are not so indispensable that we cannot be let go on our first day, leading stakeholders in taking a longer term outlook can bring a few more stage gates. This is particularly the case when we walk the talent tightrope with our team.

In a hiring environment that is still Recovering From The Great Attrition, line managers need to take care to retain top talent while apprehending that budgets are not limitless nor opportunities endless. A situation that is further complicated as organisations engage in protracted belt tightening while they navigate the near term. As one CEO observed in a recent keynote, ‘we have plenty of money, but need to watch our burn’.

Why I think it without hyperbole to compare the process to a tightrope walk is because the data is in and the traditional 20/80 rule, which stipulates that 20% of employees deliver 80% of organisational value, is incorrect. Research shows it is closer to 5% of employees delivering 95% of an organisation’s value. This is because, particularly in the case of highly complex roles, the value to effort ratio clocks high performers as being 800% more productive. A statistic which stems from:

five separate studies involving 198 samples including 633,263 researchers, entertainers, politicians, and amateur and professional athletes. Results of each of these five studies are remarkably consistent and indicate that individual performance does not follow a normal distribution.

O’Boyle Jr & Aguinis (2012)

To put these numbers into a business context. If you were working on a new product, and a competitor were to use 20% more great talent in their organisation, they would beat you to market even if they started a year or two later. In an environment in which speed to market is again on everyone’s lips, failure to find and keep top talent can make or break an organisation’s strategic roadmap.

Talent Matching

One of the most vexing elements in resolving for the talent quandary is that in almost half of all organisations surveyed, respondents claim to have between no and some clarity regarding which roles are critical to their organisational success. In lock step with this alarming statistic is the invariable absence of a menaingful strategy for developing talent once it is identified. An inevitable result of the general lack of awareness within leadership teams about the importance of talent development.

A challenge for any manager trying to extract their organisation from this quagmire, is that it is not enough to start sending key staff off for training and certification. Managers need to match the right people to the right role and then look to further their skills. Part of the reason for the need to talent match is to counteract the observations made by Laurence J. Peter and Raymond Hull who penned The Peter Principle, the general conception of which is:

In a hierarchy, every employee tends to rise to his level of incompetence… In time, every post tends to be occupied by an employee who is incompetent to carry out its duties.

Peter and Hull (1969)

Though intended to be a satire of management, it has come to be adopted as a serious observation about the failings of many organisations. To counteract this, there are three key areas in which managers can seek to redress the balance and unlock the value proposition of their organisation.

A note on value: there are two primary forms of value in an organisational context:

1. Value creation: responsibilities such as revenue generation or efficiency improvement.

2. Value enablement: provided by the functions and roles that support the value creation process.

Both are needed for the sustainable generation of organisational value.

The first is to identify where and how value is created in your organisation. This is often harder than it seems — particularly if senior leaders feel judgement is being cast upon their department or sphere of influence. Yet if a confident senior leadership team can have a frank conversation about the value their respective business unit generates and the existing and required roles which drive that value, they are in a better position to identify and name the holders of the critical roles in the value proposition. This enables key employees to be developed or reallocated as business priorities necessitate.

The second is for managers to foster a matchmaker ability. This can make the difference between the right person in the right role and an available person in an available role. This is particularly challenging when the incumbent has been in a role since before the Ark. Even if they are not the best person to perform the role, negativity is so often associated with moving existing staff. Ways to tackle the matchmaker problem involve:

  • High Availability Roles: there is little use getting the right person in the job and then packing their day with meetings, training, and other events, then wondering why maximal value is still not being created.
  • Scaffolding for Success: this involves getting the basics right. Consider each person’s job description, and then enforce it. This will prove far more challenging than it seems at face value because everyone has their pet thing they like to work on, be it invoicing, story approval, attending planning meetings etc. While all of these are important, unless an employee’s job description revolves around that key activity, changes need to happen when an employee is spending so much time attending discovery meetings that they have no time left to write a business case or process invoices.
  • Monitor with Metrics: once time is allocated and a team member sufficiently scaffolded, it’s time to monitor the outcomes of their work. Time and motion studies have largely gone out of vogue, and in many organisations, timesheets are bitterly resented. But, unless assurance can be given that the right person is in the right job performing the right activities, and there is measurable outcomes from their activities, organisational talent will remain underutilised.

Third, move key people often and early. While being moved can create its own problems in an organisation — for example a loss of business process knowledge when a role incumbent moves to another team — if an organisation is undergoing transformation, then it is a certainty that roles are undergoing transformation too. Incumbents will tend to stick with ‘established ways of working’, and this can be death to a new initiative. Quarterly, or at most semi-annual, assessments of critical employee placement is essential to the talent maximisation process, and it is witnessed in the research:

“fast” talent reallocators were 2.2 times more likely to outperform their competitors on total returns to shareholders (TRS) than were slow talent reallocators.

Barriere, Owens, and Pobereskin (2018)

Conclusion

At the risk of stating the obvious, the first thing to remember from this article is that we are talking about top talent and critical roles only — accounting for between 5% and 20% of the people in an organisation. This is where most of the value originates, and this is where the regular restructuring efforts need to be targeted — not at the balance of the organisation’s employees. Moving everyone else around to try and unlock the untapped potential in a ‘fast’ talent reallocation strategy, will have a counterproductive effect.

There is also a risk of ‘bad decision masking’. That is managers who are, to be frank, not managing and try to compensate by leaning on restructuring processes to mask their bad decisions. When you see a manager constantly restructuring, and with nothing to show apart from another round of restructuring, the only restructure that should follow is of the leadership team.

The other takeaway is to go back to where I started — having a future focussed senior leadership team. By that I do not mean ‘visionary’ leaders, there really are more than enough of those to go around already. Rather, I mean leaders who go beyond merely setting appetising goals, and instead have a plan for the journey and detailed knowledge of both the macro and micro elements that enable teams to succeed. This is essential when reallocating talent. Unless it is done sensitively, and with a clear strategy for how to mitigate the sudden void created by a talented person leaving a team, the result can look like chaos rather than vision.

Finally, the whole process will likely be for nought if managers only focus on the key talent. They may be the superstars driving the vast majority of value but, without upskilling the wider employee base two negative outcomes will likely emerge. First, the stars will end up dealing with too much organisational friction from undercooked employees to unlock maximal value. Second, there is the distinct possibility that people will come to resent rather than support the stars and consciously or unconsciously undermine their efforts. This will create an adversarial environment in which top talent will leave, bottom talent will become disaffected, and the organisation will fail.

Perhaps a melancholy note on which to conclude, but I hope that underscores the process. Because it really is a make or break issue for an organisation.

Good night, and good luck.


Photo by Maarten van den Heuvel on Unsplash.


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