How to spotlight the critical roles that matter
Successful businesses today, generate more value from the knowledge and skills of their people. This is what the Knowledge based economy means. That the IP that drives differentiation is embodied in the expertise of key people.
This is not an either or. You are not a physical or a knowledge based IP organisation. What we see is organisations need rare expertise to get the value out of their legacy assets. As well as needing new expertise to create new ideas.
For organisational leaders, this raises two questions.
How to identify the critical roles to invest in that have a disproportionate impact on creating value? The roles where deep expertise makes the difference..
How do we develop the experts we need to fill those roles on an ongoing basis?
To accurately identify the roles that matter you need to understand two different sources of tacit knowledge.
Type 1 is the professional tacit knowledge. What does it take to be an amazing lawyer, pilot, marketer, research chemist, underwriter, developer, leader and many more.
This turns up as expertise and there is a well developed field of research in this area. One of its core findings is that true expertise in a complex area takes around 10,000 hours or 10 years of experience. To become a true expert take time.
This is backed by evidence about the difference in outcomes that a true expert gets. Factors of 10x or more compared to a "competent" performer in areas which are truly complex.
Type 2 is tacit knowledge specific to the organisation. This is the systems, processes, history, politics, networks, relationships, markets and services that a complex organisation is made up of. For some roles in some organisations this type of tacit knowledge is vital. Size and complexity are clear drivers of this.
The presence of type 2 tacit knowledge is demonstrated by research on star performers and teams. When stars move from one firm to another, they do not maintain their star status in the majority of cases.
Then there are roles which require both. Both professional and organisational tacit knowledge. Our view is that the number of these roles is growing in large global businesses. And the scale or their of impact is growing too.
So how does this link to Talent strategy?
A good strategy has to answer the questions of where to play and how to win. This is what allows differentiated investment and focus.
Pinpointing the critical roles is a crucial building block of where to play. How you fill these roles becomes the answer to how to win.
This need for differentiation explains why the one size fits all approach is past its sell by date. Talent teams fall short where they rely on standardised 9 box models and succession planning.
The lack of differentiation leads to value gaps across the organisation. Organisations find themselves exposed in the critical roles that drive value.
The net result. Leaders get tired of talent process that appear to add cost but no value.
The 3 step process to use critical roles to drive strategic impact
Plot key roles across the dimensions of high positive impact on strategy and high variability of results. This should have a future based view.
The top right roles are likely to be in revenue generating positions, innovation, marketing and senior leadership. They are also likely to be roles where poor performance turns up quickly.
Then plot key roles across the dimensions of high negative impact on strategy and high variability of results.
These roles are likely to be more aligned to middle management, IT, process management and regulatory roles. These are roles which grab your attention if they go wrong. But then they matter big.
The grids are there to shape insight and generate useful dialogue. It is always a value judgement in the the end rather than an absolute and requires some imagination.
There are some hard measures you can look at to support this. Salary is a good place to start when understanding impact. Recent problems and the roles that caused or saved them gives you some indications on negative impact.
Relative performance across areas shows up variability. Discretionary spend is another useful indicator
If you have it available, Organisational Network Analysis can be another clue to identify impact roles.
For the highlighted roles plot them against speed to perform and ease to find.
The speed to perform is effectively a measure of the type 2, internal, tacit knowledge a role needs.
Ease to hire is a measure of the size of the available talent pool internally and externally for a role.
Again there are hard metrics you can use to guide this analysis.
Relative failure rates of new hires into a role, both internal and external gives a view of speed to perform.
Time to hire and change in salary are good indicators of ease to hire.
With this second filter we now have a very clear view of which roles are critical. We know where to play.
An interesting finding from this work is that senior leadership shifts from being a top right box to bottom left. Though high impact, and definitely variable in performance, senior execs are hireable from outside. There is an active market.
The degree of internal, versus industry knowledge, needed depends on the business context.
The insight from above gives us the clues we need to answer the how to win question. It directs the strategic choices that will give us the best chance of success.
It effectively tells you where to invest most time and energy.
There are then a range of different initiatives that can be put in place to drive the needed outcomes. These include managed career paths and succession, senior professional academies, external talent scouting, development centres, internal role specific development programmes etc.
At this point the right option is down to the organisational context in terms of growth rates, attrition rates and degree of skill change. This hen leads into the right measures, metrics, operational processes and activity plans.
What is key is that the talent strategy drives value through the delivery of the best possible talent to the critical roles.
These critical roles need to take into account both the need for professional expertise and the need for internal organisation tacit knowledge in terms of value for the organisation.
If we agree with the proposition that in the knowledge economy more and more value is embodied in people and that large organisations are getting more complex this is an inescapable conclusion.
The consequence is that a talent approach based on standardised process and focused on hierarchy as the key determinant of investment will fail to deliver large chunks of value.