Revenues and profits
Whatever the reason, however, Corporate Executive Board's Corporate Leadership Council research demonstrates that the business case for business leaders to improve their performance in the area of managing talent is clear. Business leaders who are most effective at managing their talent generate revenues and profits up to 7% greater than their counterparts who are less successful in this crucial area.
Furthermore, our research also suggests that strong talent management can also pay dividends in terms of raising employee effort levels by 25% above the average, as well as making a marked positive impact on worker retention rates.
Despite this compelling business case, our research finds that just 19% of senior executives have the necessary combination of commitment to talent management with effectiveness in delivering the talent management practices to driving these outcomes.
The relatively small size of this group, which we call ‘Talent Champions’ is partly reflective of wider failure by organisations to offer the guidance necessary for leaders to manage first individuals and later teams and organisations effectively as they rise through the organisational ranks.
This owes majorly to the inherent belief in many organisations that their intuitive business acumen and management skills alone will carry them through, something which is invariably not the case.
This in turn explains a trend whereby many managers are committed to managing talent but are ineffective in doing so when called upon. According to the Corporate Leadership Council study, this group of business leaders, which we call ‘Strivers’ accounts for the 42% of executives who are lacking in the skills required to undertake critical talent management activities.
Talent management and commercial link
So how do executives make the leap from managing individual team members to facing the strategic challenge of leading a business unit or function containing a broad portfolio of talent effectively? Thankfully for busy executives the investment required here is one of focus rather than time and large-scale HR investments.
The CLC’s research has identified four key steps organisations can take in order to convert a greater proportion of their business leaders into successful ‘Talent Champions’, founded upon the principle of connecting more clearly talent management activities with commercial strategic imperatives.
A first crucial imperative is to ensure closer link between the organisations strategic plans and its talent plan. As such core business and budget planning activities should incorporate key questions related to what future talent and capabilities are needed to execute on strategic priorities and determining whether a ‘build or buy’ approach should be taken to securing critical talent resources.
Secondly, the organisation needs to support its leaders in identifying, developing and managing its high-potential (HIPO) employees more effectively. Especially now where HIPO employees’ disengagement and discontent with their roles has been on the rise over the past two years.
On this issue, success hinges first and foremost upon effective identification of the organisations’ future high potentials, as distinct from its current ‘High Performing’ employees before ensuring they are assigned to business critical roles and placed on long-term career paths which inspire their confidence in the ability of the organisation to deliver a successful working future for them.
Thirdly, is for organisations to establish a culture of accountability for talent outcomes. Most organisations try to improve line leader focus on talent management activities by linking financial incentives and formal objectives to the completion of core talent management activities. However, our research suggests that this often leads to a “check the box” mentality that might see processes and activities completed without talent engagement and development outcomes improve.
Long term view
Instead, we have found that the more effective strategy for HR to improve line leader focus on talent outcomes is to use ‘soft’ accountability practices such as ranking and publicising managers’ effectiveness at retaining talent or engagement levels among their staff.
Finally, it’s critical that line leaders and HR business partners redefine the focus of their relationship away from the daily fire fighting towards activities with long-term impact like succession management, workforce and capability planning and talent development.
Ultimately business leaders only succeed as “Talent Champions” if they get the right level of support and advice from HR on these critical areas. Ultimately, the carrot of a 7% raise in revenue and profit should be sufficient to improve business leaders’ focus on these core activities. However, more focused and engaged business leaders alone doesn’t automatically produce better talent outcomes, HR plays a critical role in building the necessary level of business leader capability and skill at managing talent as well.