According to a recent Forbes article, world-class companies have talent management systems and processes that are able to identify two people who are capable of filling every key job. Research done by McKinsey shows that these types of companies have a 22% greater return on equity than their competitors. Unfortunately, however, they account for only about 10% of companies. No more than a third of all organisations have processes that are able to produce at least one successor for every key position. The remaining 65% flounder around without any defined talent or succession management system.
 
In probably the biggest piece of current research on talent management, McKinsey surveyed almost 13,000 senior managers in more than 120 companies, and asked them about how talent was managed. Many of the results are startling. For instance, managing and improving the talent pool was only seen as a top priority by 26% of the respondents. And even more distressing, the survey found that virtually no companies made managers at all levels responsible and accountable for developing and retaining talented people.
 
A paper published in 2006 by The Economist Intelligence Unit in cooperation with DDI begins with the following sentence: "The management of a company's pool of talent is now too important to be left to the human resources (HR) department alone and has become the responsibility of the top executive." They draw this conclusion after interviewing 20 corporate leaders from companies with revenues greater than $1 billion. Thirty-five percent of these executives said they spend 30-50% of their time on talent management and another 35% said they spend about 20% of their time on it. Given the overall demands on a chief executive's time, this is a very significant proportion. When Jack Welch was CEO at GE he was very aware of the important of talent management and says he spent half his time on people development. He visited GE's corporate university at Crotonville, New York, every two weeks.
 
 
Retaining talented people is much cheaper than recruiting them but companies continue to accept high turnover rates. And when they recruit new people they spend very little time integrating them into the organisation and training them. According to Deloitte's calculations, American companies spend almost 50 times more to recruit managers at the $100,000 level than they do on training them each year.
 
There is a very strong correlation between employee retention and the quality of management. The Saratoga Institute conducted 19,700 exit interviews of key employees leaving companies, and found that 85% of bosses thought their top people left for more money and opportunity. But the exit interviews showed a very different picture: 80% of the leavers said they left because of poor management and leadership or because of a negative and unsupportive company culture (i.e. poor management everywhere).
 
In interview after interview managers say that they tend to leave underperformers in their jobs for too long. It's not just a depressing comment, it's a pitiful one. Management has to come to grips with the issue of performance, not just whine about it. Failure to do so is one of the principal causes of staff attrition. Good performers leave when they see that nothing is being done about poor performers. As a Wells Fargo executive put it: "The only way to deliver to the people who are achieving is not to burden them with the people who are not achieving".
 
Is anybody doing anything about this? Virtually every major management and business publication in the world has been running articles about the scramble for talent, but very few organisations appear to be responding to the impending crisis. In McKinsey's War for Talent Survey, 93% of senior managers who were asked the question "Should line managers be accountable for the quality of their people?" agreed it was very important. When asked "Are line managers held accountable for strengthening their talent pools?" only 3% said yes.
 
If you want to manage the talent in your organisation, the first thing you have to do is identify where it is. How can you keep your most talented people if you don't know who they are? Have you got a clear, objective way of measuring performance? Measurement is critical. Can you spot those people who are not performing at an expected level? Can you identify the precise gap between what they are currently doing and achieving and what they are expected to achieve? Do you know what the benchmark for their performance is, and do they know?
 
Managers at every level in the organisation must be made accountable for developing and retaining talented people. But in order to do this they have to have the tools to assess behaviour and performance as it relates to every specific job, to identify the gaps between delivery and expectation, and to give people the knowledge and skills to raise their game.

 

In this tough economic time, companies have reduced their commitment to professional development of leaders.  Training budgets have been slashed and yet, all companies still have leaders and still need to work with and develop their people.  Join me and David Porter of BullsEye Leadership in the MOJO Leadership Now teleseries, be the best leader you can be and Move Others to Join as One! 

 

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Enjoy!
Patti