Why Talent Management is important

Talent Management has broadly existed in various forms for many years with organisations using such processes as succession planning and competency frameworks to identify and develop their high potential performers.

The term itself wascoined in the late 1990s, gaining particular momentum as firms tuned into the fact that having a consistent and focused approach to managing intellectual capital within the organisation would have a positive impact on the business.

Since then White Papers, surveys, reports and articles on the subject abound, each with perhaps a slightly different definition of talent management and each taking their own angle, but all with the same consistent message: there are clear bottom-line benefits to having an effective, integrated talent management strategy which is underpinned by the broader business imperatives and this enables current and future success.

Impact on business performance

Various studies have focused on these business benefits and the role of talent management practices and, with the EU backing a legislative initiative to improve the gender balance in the boards of companies listed on stock exchanges, there is a further argument for having a more inclusive and targeted approach to talent management.

• Huselid and Becker (1995) researched the HR practices of 740 companies and found that those using High Performance Work Systems (HPWS) or integrated talent management practices had significantly higher levels of organisational performance, measured by an increase in market value per employee.
• Watson Wyatt’s European Human Capital Index study in 2002 suggested that there were 36 HR practices and policies which were associated with an almost 90% increase in shareholder value.
• The Institute of Work at Sheffield University conducted a study on manufacturing companies in 2001.  Its research demonstrated that people management practices were a better predictor of company performance (productivity and profitability) than strategy, technology or research and development, accounting for 20% of the variation in the financial performance indicators.
• Ernst & Young in its report titled ‘Managing Today's Global Workforce: Elevating Talent Management to Improve Business’ found that those companies which effectively manage talent consistently, deliver higher shareholder value. They analysed results from a survey of 340 senior executives conducted in 2009 to assess global talent management practices and evaluate their impact on business.  It was found that companies which align talent management with business strategy deliver, on average, 20% higher return on equity than those without alignment; those that integrated their talent management programmes delivered 38% greater returns.

 

Impact on employee engagement

Another strong argument for investing in a coherent talent management strategy is engagement.
There is a growing wealth of data which suggests that an engaged workforce leads to a range of organisational performance benefits.  For instance, the 2009 MacLeod report to Government cited a number of correlates of high engagement levels, many which have been reported by the poll experts Gallup in its studies of engagement.
Among its findings:

• In organisations with strong talent and engagement practices, more employees were likely to recommend the company to others, with 67% of employees in organisations who had strong Talent Management practices advocating their company versus only 33% of employees in the organisations which did not.
• When comparing business units, those with engagement scores in the bottom quartile averaged 31 – 51% more employee turnover, 51% more inventory shrinkage and 62% more accidents than those in the top quartile.  Looking at the same business units, those with engagement scores in the top quartile averaged 18% higher productivity and 12% higher profitability.
• In a study on the earnings per share (EPS) growth of 89 organisations, they found that the EPS growth rate of organisations with engagement scores in the top quartile was 2.6 times that of organisations with below-average engagement scores.

Engagement is now understood to be a major driver of individual and organisational performance, and has therefore become a management imperative and an important aspect of talent management.
An effective talent management strategy will ensure that critical roles are understood and that key people and your stars of tomorrow are identified, managed appropriately through the organisation, engaged, motivated, empowered and retained.  Effective talent management practices and engagement are strongly linked.

If you would like to read more about developing the talent management strategy for your business - or updating the plans you already have, contact us and we'll send you the first in our series of three White Papers.

Key Behavioural Indicators for Mental Toughness

Our article earlier this year included a description of mental toughness, an essential characteristic in these challenging times.

(We might argue that those who possess these abilitites are well positioned for any organisational challenge, but that would be a pet subject and not that of Head Light Communications!)

Generic metal toughness and resilience diagnostics are widely available and they measure just that particular characteristic, often solely quantitatively. Many competence frameworks also include indicators that have a relation to the concept of mental toughness, often in the context of the competency itself. This is admirable but the overall rating for the competency obscures the specific mental toughness aspect, unless the specific questions are investigated.

With the importance of mental toughness in today’s (and in all likelihood tomorrow’s) business environment, the assessment of the specific competency of Positive Organisational Behaviour, Personal Resilience (or some other such name as to be meaningful and acceptable in your own organisation) would be a pragmatic response to the turbulence of the economic environment. This can be achieved via the extension of a routine assessment such as a performance appraisal or a 360-degree review and doing so would be neither overplaying its importance nor clouding its measurement with other data. This would also provide a specific measure of this ability within the context of the role.

When designing the assessment for this competency, which would include indicators of personal resilience to be assessed against, do also include free text questions so as to provide for the gathering of evidence to reinforce this behaviour. Similarly, expressions of ‘toughness’ may not have been welcomed by those on the receiving end of them and by providing them with an opportunity to cite examples, helps them and the person being rated to explain the feedback. Finally, with these resilience indicators, expressing the indicator in a negative sense (by using a contra-indicator) is more likely to elicit a more accurate rating, as is being selective as to who (i.e. which review group) is asked to rate which indicator. (Note: not all 360 or appraisal software can do this – needless to say, Talent 180 and Talent 360 can!)

Below we offer, for your review and adaptation a selection of indicators for a Personal Resilience competency that you could use in your own assessments:

Title: Personal Resilience

Description: The demonstration of perseverance and conviction directed towards the achievement of goals despite pressure or adversity. An individual who shows resilience would adapt their behaviour according to the circumstances, proactively coping with obstacles and recovering quickly after experiencing setbacks. Engaging in strategic planning and forward thinking, anticipating outcomes and developing contingencies are also behaviours demonstrated by people who are effective in this area. Resilient individuals tend to manage pressure effectively, maintaining a positive focus, acting assertively and making sure that benefits are gained from all situations.

Positive Indicators:

• Focuses on performance outcomes despite uncertain or difficult circumstances
• Encourages others to take a positive approach to change
• Uses experience or knowledge to manage and mitigate against risks
• Takes on challenges with a ‘can-do’ attitude
• Maintains a positive attitude during times of uncertainty
• Concentrates only on things they can control or influence
• Reviews successes to understand the factors that contributed to them
• Acts quickly to capitalise on opportunities for business growth or improvements
• Remains calm during stressful or challenging situations
• Seeks to improve their own performance by both soliciting and acting on feedback
• Projects a credible, positive self-image.

Contra-indicators:

• Dwells on setbacks or things that have gone wrong
• Allows short term or minor failures to obscure longer-term goals
• Reduces efforts in the face of disappointment or rejection
• Rarely takes opportunities to build confidence by celebrating success.

Head Light Communications can assist you in the deployment of the Personal Resilience Competency and the full range of competency assessment and development programmes using our Talent® technology and supporting consultancy services.