The 5 essential steps to create winning talent strategies
A winning talent strategy is one pillar to being a great, sustainable business. Winning in the sense that it creates differential performance compared to the market. Talent in the sense of the people who make a difference. Strategy in the sense that it gives direction and is clear about what is in and what is out.
When organisations get it right they achieve 3 things
Outstanding business performance compared to their sector
A deep engagement to the firm and the opportunities it provides to learn and grow
A supply of skilled talent for the organisation and to the wider community in which they operate
These 3 things seem to be well worth aiming for.
But winning talent strategies are rare. The most common experience is that the talent strategy in big enterprises is little more than a process. It is stuck in the past, slow to react and pretty much the same as other large companies. It is not delivering the differential that a strategy needs to deliver whilst still absorbing time, money and resources.
Fixing this is difficult but possible. We have worked with successful companies who get it right through smart effort and by putting in the place the following 5 outcomes.
1. Create clarity by deciding what role the business wants talent to play
The foundation of any talent strategy is clarity and agreement on what problems and opportunities it is solving for. All business strategies need the right talent to execute them. Talent strategy is the answer to the question of what role does talent need to play to execute the business strategy.
This comes from a clear view on the reality today and where there are existing performance gaps against the operating plan. It then needs a view of the future and what will need to change to deliver the business strategy. All strategies involve change of some degree.
The work has to isolate which roles are truly key for the business. The roles that are essential for success. The roles which the business needs to employ directly, not contract in. These are the critical or lynchpin roles which drive the differential value and which deliver the creative leaps. The people in these roles are the ones the business needs to trust and give them the discretion to make a difference.
It also identifies which roles are no longer as critical as they once were. Roles of capabilities where you can either buy in skills to do the job or even buy in a service. Some of these roles are high skill, but these skills are easily accessible with limited friction to bring new people in.
There is then the question of how much the business currently spends and how much the business wants to spend on talent activities. There are cash costs around programmes, tools and resources. There are normally big opportunity costs incurred in delivering talent processes. There are more contentious costs around the costs of talent failures in terms of recruitment and fees. Identifying these costs takes leadership judgment as there is not right answer. At the end there needs to be a monetary number which gives a quantum to the current spend and allows a more sensible discussion about what needs to change.
From this analysis comes a prioritised list of what outcomes the talent strategy needs to deliver. Crucially this needs to be outcomes, not activities. The final stage is to get the priorities agreed by the leadership team and then understood by the wider business.
Good is absolute clarity about what the Talent function is being asked to deliver, how this links to the business strategy to deliver differential value, how much is being invested and where you want to build, buy or borrow people.
Bad is an ambiguous set of ambitions which do not define what is in and out, talk about activities not outcomes and which don’t create direction.
2. Design a set of scalable rules to enable people to choose to act in the right way
Once the priorities are set, understanding how you want people to act to achieve the priorities, allows the business to achieve genuine scalability.
Where possible, you want people to do the right thing, for themselves and the organisation, without the need for continuous central intervention. You want your people to be able to do the right thing independently of what they think others are going to do. You want this action to happen at scale and with the minimum cost.
Creating scalable action involves designing the mechanisms that frames what you want people to do as the best option and the obvious choice. This means being clear about understanding peoples’ beliefs about what “works around here” and how they see the trade-off of different possible actions.
People are natural game players and you are effectively setting the rules to make the game a positive one. There are only really 3 areas in talent the business needs to set the rules for to get the actions it wants.
Getting the next job - How often and for what jobs do people actually apply? How do people show their body of work and their abilities? How do people signal what they want to do next?
Who gets the job – How are jobs publicised? Who can apply? How are shortlists made up? What is the selection process?
Developing yourself and others - How often and how do people take action to find and develop others? How often and how do people take action to develop themselves?
Each of these links to a set of beliefs
How likely am I to get a job I apply for?
What happens to people who don’t get the job they apply for?
How will my manager react to me applying for a job outside the team?
Is the job process fair?
Is the selection process accurate and unbiased?
What jobs are important to progress around here?
How long is too long in a job?
How long is too short in a job?
How much effort should I put into developing myself for the future, versus focusing on work today?
What kind of development works for me?
What kind of development is valued around here?
A good talent strategy has to impact this interplay of beliefs and actions to help people do the right thing. If you don’t impact these beliefs and actions, nothing much will change.
Working out what to do takes rigour and discipline. The good news is there are a few useful tools you can use for this.
The first set of tools come from economics and are the Nobel prize winning ideas of Mechanism design, Game theory and Signalling theory. Combined they provide a powerful framework to understand what you can do design systems that will give you the best outcomes, and what the trade offs are. These tools allow you to understand what is happening today, why and where you can make an impact. These tools are based on the reality that people do not have perfect information, that they are political and that they are intentional.
A second set of tools is from the world of risk and uncertainty. These tools show when the use of simple rules of thumb create better, more accurate, decisions than complex, data rich models. These rules of thumb set the boundary conditions of what is expected, when to do more and when to stop. They work because they reduce the amount of data people need to use to the bare minimum, are easy to understand, remember and apply.
These simple rules of thumb are not just easier to use, they actually outperform more complex approaches in the real world again and again.
Real examples of what we mean by this are
Overweight for potential when you appoint for a role above ability to do the job today
Leaders need to stay in role for 3 years, one year to understand, one to make changes and one to live with the consequences
Each year remove the bottom 20% of performers. It is unfair on their colleagues to have to carry them and unfair on them to be in a situation where they are not succeeding
Executives should spend at least 2 days a week on talent and people issues
If you are not promoted within 3 years you are unlikely to be promoted again
To be a senior leader you need international experience
Each of these rules have obvious impacts on beliefs and actions. They set the frame of how people expect the be treated, they create a set of beliefs about what works and what doesn’t.
By intentionally designing what these rules are a business creates the scalable behaviours that drive talent day to day, in every location, at any level. Instead of trying to identify all the things are person should do, these rules specify what success is and let the people involved work out how to get there.
As the strategy changes the rules of thumb the business needs change as well. By making the rules and the underlying beliefs explicit it becomes easier to identify which ones to change and how.
Good is a clear and well-designed set of guiding rules that drive individuals’ actions at scale to deliver the business strategy
Bad is conflicting messages where people know that what is claimed as important is not what is really rewarded. Where the business relies on process. Where people are using old rules of thumb that are no longer relevant.
3. Define a coherent portfolio of additional talent activities to deliver the strategy
Not everything can be left up to people to act in their own self-interest, some shifts require intervention and standardisation of good practice to create change.
The portfolio is made up of a mix of interventions and processes.
There are the typical talent interventions; leadership development, coaching, high potential programmes, campus hiring schemes, interpersonal skills training, learning how to innovate, long term capability building etc.. These are all areas where the business needs to intervene to create activity above and beyond business as usual.
There is an overlap with L&D and the line between the two is always a bit blurred. Talent interventions are about creating capacity for the future as well as improving performance today. They need to be there to overcome a business’s short term bias to deliver in year results, and put off the work that guarantees the future.
Then there are the processes. There are the core processes of hiring, promoting and appointing people which the business cannot exist without. Then there are the other common processes of development planning, talent review processes, international mobility, induction, assessment, performance management etc..
Coherence comes when the processes and the interventions line up and amplify each other.
Too often when there is not a clear strategy, organisations end up with a jumble of well-intentioned, but poorly aligned activity. You find the hiring process uses different competencies to the development process, the leadership competencies are not really used in the leadership development programmes, and there are multiple versions of the truth about how to learn and succeed..
The challenge of getting it right is threefold. There is an unlimited demand for talent interventions from leaders, managers and staff who all want to find ways to improve and feel good about themselves. No one is ever fully developed. These interventions are expensive, so are supply constrained, Finally talent actions are normally uncertain in their impact. Just because someone has been on a course does not mean they have changed. Just because there has been a performance conversation doesn’t mean that performance improves.
In this world of unlimited demand, constrained supply and risky outcomes the business needs a smart portfolio of activity that crucially adds up to more than the sum of its parts.
What the successful talent business do is to set up their portfolio of activity in a way that balances risk and amplifies effectiveness. These talent portfolios are coherent in 3 senses
Coherent in that the portfolio adds up to something more than the sum of the components. They clearly link to the strategy rather than being just a list of initiatives which create activity without direction.
Coherent in the sense that the design of the portfolios’ constituents is based on evidence based principles about what works to create long term performance. They deliberately balance short and long term benefit. They mix high certainty but low impact activities with higher risk but higher impact work that can create transformational breakthroughs. They avoid personality driven interventions.
Coherent in how the portfolio is deployed and with who. They make sure the interventions match the scale of change that is needed. That activity is prioritised to who and what matters.
The activities need to be deliverable, not just a never ending list of “wants to haves”. This means having either the right skills in house or the budget to buy what has been promised. But delivery capability is only one side of the coin. The good businesses make sure there is the attention and capacity of the business to participate and engage. They know what the business can cope with.
The portfolio needs a balance of learning that is group driven and learning that is individually driven. We have moved from a world where organisations are the sole creators of good learning. There are more learning resources of higher quality out there than ever before. You can’t out internet the internet in terms of access to learning.
Where there is group learning people recognise it is as much about building social capital and relationships as the content. It is important to avoid the trap of choosing the channel of delivery before choosing the outcome. The tool needs to fit the challenge.
Thinking about all the talent activities as an optimised portfolio with different overall risk returns aligned to the strategy allows a business to create the coherence its talent need to succeed.
Good is an integrated portfolio of activities that work together to address the biggest priorities. They make sense as a package. They have a coherent learning philosophy. They are at a scale that makes an impact. They are deliverable.
Bad is a list of initiatives that lack balance, clear impacts or which are driven by the personal preferences of senior leaders. Processes and initiatives that conflict. Delivery by enthusiasts not experts. Delivery channels based on budget not effectiveness. Initiatives that lack the scale to make a difference. Mismanaged expectations of change. No one has ever changed a business with a 2 day leadership programme!
4.Datify your talent and create the dashboards your leaders need to credibly track progress
To maintain momentum and management interest talent needs to be credible. This means Talent needs to show how it tracks progress towards the shared goals.
In a world of scarce attention, leadership will only stay engaged when you can show the money spent is making a difference, that you are making progress.
Reporting on talent frequently doesn’t show progress. It is ignored after some initial interest in the new “talent dashboard”.
The 4 types of measures we see working are
Talent velocity. How many people are getting promoted, length of time in role, external hire rate and how many good people are we losing
Diversity. A winning talent strategy solves for diversity at all levels. The key measure that shows the success of a talent system, as opposed to hiring, is relative promotion rates.
Target behaviours. Typical examples are how many people are applying for new jobs, how many peoples’ development plans have been acted on, how many people have said they are open for new opportunities on LinkedIn
Game changers. How many game changers do we have in the business? People who you believe can make a difference in the world. This will always be subjective but matters. This links to succession and the long term success of the business
These types of measure generate the credibility that a talent function needs. They are directional in the sense that more is better than less. They track what people in the business are doing, the outputs of talent, not what talent is doing, the input.
Good is a set of measures which link directly to the strategy, which are impacted by the talent strategy, are indicators of change and which excite the exec team.
Bad is a set of static measures that don’t change. Measures that track activity rather than outcomes. Measures of process compliance.
5. Connect people to the strategy by telling the stories of success and showing people what they can be
The final element of the talent mix is connection. This comes through telling the story of “how you succeed around here” in a way that creates genuine excitement and engagement.
This means showing people what works around here, what success looks like and what is changing. In the end you can only be what you can see, and imitation is the best option for learning what to do. Showing people what you want them to be is so important as it allows people to see the wider picture, not just their local world.
People want to engage in “the game of talent” when they think rules are clear, the rules are and fair and when they know what they are being asked to do. The easiest way to do this is to show them, not ask them to work it out themselves.
Stories of success work. A regular drip, drip of what works around here helps people work out what they need to do. Who has been promoted, what they did, why it mattered and the opportunities that opened up.
The kinds of stories that work cover issues like
What success looks like
Who is successful
What they did
How it works
Shows success is possible
Makes you feel part of the wider company
Stories are flexible. Stories of success can change as the business change. New realities shape success. This is the opposite of competency or behavioural frameworks that try and freeze success in a moment of time, that soon becomes out of date.
Stories show what happens when the strategy works in a way that excites and enthuses.
And when you get it right these stories add up to an ethos, a spirit of what it means to be here, what it means to be part of a winning team. Winning feels good, winning brings pride, it brings trust and it helps everyone be willing to sacrifice a bit for the wider team.
Good is using regular stories of success to show the best way to succeed around here. Sharing stats on progression and success so people can judge their actions
Bad is relying on process and assessments to explain to people what good is. For people to only see the experience of the team they work in and not the broader picture.
These 5 steps can create a winning talent strategy that is fun to implement and makes a real difference. Each outcome has value in itself. Put together, applied in order, they can transform the talent picture in a business.
The clarity to set direction and energise
The scalability to create action everywhere
The coherent portfolio of actions that amplify activity and balance risk
The credibility that comes from measuring progress
The connection that comes from enthusing people with the story of success
When organisations apply the steps to achieve these outcomes they move away from a feeling that their talent is stuck, slow and they are operating the same as everyone else. They move towards a feel of simplicity and speed. Where the whole organisation just knows what it is doing to create the talent it needs, and that this talent shares a spirit and ethos that will sustain it going forwards.
This is a prize worth fighting for.