‘I Got 99 Problems’
TALENT MANAGEMENT TRENDS & THE NEW NORMAL: PART-2
“I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.”
Lawrence Bossidy
As we mentioned by quoting Bob Dylan our previous article on talent management trends, ‘the times they are a-changing’. They’re changing fast and it’s not going to stop anytime soon! It’s called ‘The New Normal’. Welcome to the future, people. It’s just that the future is already happening — today!
The New Normal is a VUCA environment: Volatility, Uncertainty, Complexity, Ambiguity.
This now is ‘the new normal’ that as HR practitioners we all have to learn how to operate within. Read previous article on talent management trends here: Houston, We’ve Got A Problem.
In this article, we’re going to look at some of the key strategic trends and challenges facing talent management that result from the changes wrought by the The New Normal.
Now days, most business leaders now believing what HR practitioners have long known : that an organisation’s people (AKA: human capital) really matter for a brand’s performance and bottom-line. Yet still 35% of all employers are struggling to fill their vacancies (according to a 2013 ManpowerGroup global industry survey) AND 93% of companies lack a well-defined talent management strategy or have no such strategy at all (according to a 2010 Boston Consulting Group global industry survey)!
Now, a BIG part of the cause of businesses struggling to hire, develop and retain the right skills and talent that they need for all their organisation’s jobs is in no small part due to a skills and talent shortage in many countries around the world (which we explore in detail in our previous article: Houston, We’ve Got A Problem). But poor and outdated talent management practices at many organisation’s are making this problem worse than it needs to be.
How these traditional talent management practices are falling short is what we’ll look at and explore in this article.
A summary of the traditional talent management practices are made up of the following:
- Talent Identification Hiring Practices, including psychometric testing & assessment centres
- Graduate Programmes, including in-house graduate-training programmes
- Early Recognition Of Top Talent & ‘High Potential’ Employees, including often inflexible systems for indentification & changing whom is identified
- Career Planning, Development & Support, usually only for a small percentage of ‘high potential’ employees in leadership & senior management roles
- Succession Planning, which are often the totality of many organisations’ ‘talent management’ programs
- Mentoring & Exposure To Senior Management, which usually is only available for a small percentage of ‘high potential’ employees in leadership & senior management roles (while such interventions are hard to scale for obvious reasons)
If you’re reading these methodologies and thinking they sound pretty good (or that they reflect your organisation’s HR and talent management practices), then the bad news for you might be that these approaches to talent management are no longer providing the ROI in talent that an organisation needs in order to win the ‘war for talent’ today and tomorrow!
It’s worth mentioning that talent management is a relatively new addition to HR and business. It has only been a formally recognised practice for the last 15–20 years and, while a number of best practice methodologies have been established, these methodologies are already starting to look outdated and ineffective in the current business and cultural climate.
So, let’s get started and assess where the traditional approach and methodologies of talent management practices might be outdated and ineffective in today’s VUCA world of The New Normal.
A Skills & Talent Shortage? “I Got 99 Problems”
Peter Cappelli (a Professor of Management at the Wharton School) wrote in Why Good People Cannot Get Jobs: “The skills gap story is [the employers] diagnosis. It’s basically saying there’s nobody out there, when in fact, it turns out it’s typically the case that employers’ requirements are crazy, they’re not paying enough or their applicant screening is so rigid that nobody gets through. Searching forever for somebody — that purple squirrel, as they say in IT, that somebody who is so unique and so unusual, so perfect that you never find them — that’s not a good idea.”
Critics, like Cappelli, believe that there are systemic ‘bad’ practices in the current business environment (especially those committed by HR professionals) that create the symptoms of an apparent skills and talent crisis (or, at the very least, they make it seem worse than it actually is).
For some examples and survey stats of the problems with the effectiveness of traditional and current talent management practices in today’s business environment, refer to our previous article: Houston, We’ve Got A Problem
Given the number of employers around the world complaining about a skills and talent shortage, it seems likely is that there is a skills and talent shortage of some sort across global labour markets. But also it seems very probable that some of this challenge being experienced by business are of their own making — due to poor and ineffective recruitment / talent management practices. We say this because there evidently is a skills and talent shortage, while at the same time it’s obvious that there’s always room for efficency and best practice improvements at most organisations, including in their management of human capital and talent.
The questions we want to focus on in this article is: What is the nature and cause of the talent management disconnect as it is traditionally practiced by HR and companies in today’s fast changing world? And what are some of the skills and talent management gaps that need addressing?
The Talent Management Disconnect: “What’s Going On?”
As mentioned earlier in this article, although talent management now is quite well established as a HR discipline at many organisations it’s often not always done well in the stragtegy and in execution. There are several contributing factors for why this happens, which are common across industries and geographies. We’ll look at some of these in the rest of this article below; while, in other artciles that form a part of this series on talent management trends, we’ll look at some ways to do talent management differently (and better!) in today’s fast changing world.
One significant and systemic reason for the failure of many organisations to execute talent management effectively is their lack of a strong talent management strategy.
In 2010, Boston Consulting Group conducted a global survey (of 5,561 business leaders across 109 countries) that found 60% of organisations lacked a clear talent acquisition or talent management strategy and with 33% having no strategy at all! Only 2% of companies claimed to have a clear, strong and comprehensive talent management strategy. Again, only 2%!
The same survey found that on average top executives and senior management only focussed on talent management activities for 9 or less days each year, while only 1% of respondants felt that their organisation’s talent management plans and activities were aligned to the company’s business-planning cycle. Again, only 1%!
This data led Boston Consulting Group to conclude that many companies are “relying on serendipity to meet their current and future talent needs, incurring unnecessary business risk.”
Yes, you read that correctly: most business are RELYING ON LUCK instead of a strategy when it comes to talent acquisition and talent management!
And then business leaders and HR professionals wonder why they can’t find the skills and talent they need in a competitve marketplace!
If there really is a skills and talent shortage in many countries around the world, then this haphazard approach to human capital is not helping and nor is it a sustainable way to manage talent management. Your organisation will not win the local ‘war for talent’ with such a lack of proper planning and execution in talent management.
Clearly, the results from the Boston Consulting Group industry survey demonstrate a massive DISCONNECT between the operations of business and the HR function — at least, it does when it comes to the talent management in many businesses.
This disconnect is of serious stragetic concern, if we remember the findings from the Ernest & Young 2013 global industry survey, namely that: “a majority (84%) of business executives said that their organisation’s ability to develop and manage teams is essential for future competitiveness. The executives who rated their companies as ‘excellent’ at building diverse teams were more likely to have achieved their target earnings, as well as growth of greater than 10% in 2012”.
If an organisation’s future competitiveness and performance is so closely dependent on their people (AKA: their talent), as shown in the E&Y survey findings above, then business urgently needs to fix its capacity for developing effective talent management strategy and executing it.
The responsibility for this falls on the business’ leadership as well as it being the responsibility of HR. If such a change is to happen within an organisation, then talent management needs to become a business’ top priority as well as a key driver of the organisation’s culture and KPIs.
There can be no middle ground or half measures on the need for talent management to become a strategic priority for the organisation and its leadership!
Another reason that talent management isn’t more effective in driving organisational culture more deeply than it does and why it doesn’t have a bigger impact on successfully ensuring better employee retention is because: most organisations that are running talent management programs do so with to narrow a focus and they benefit too few of the people.
In Boston Consulting Group’s industry survey, they found that most companies’ talent management activities were very narrowly focused on only the ‘high potential’ employees (who are usually only those in senior management and leadership roles), while ‘high potential’ employees in junior roles received little or no attention. As a result, the vast majority of an organisation’s employees don’t feel their employer is serious about his/her career and professional development, as well as their feeling less valued by their employer than they might otherwise feel.
In a workforce increasingly made up of Millennials, whom expect regular attention and recognition, this traditional and ‘elitist’ talent management model doesn’t work for them — especially if you want to ensure that you have a highly engaged and motivated workforce across your organisation.
This traditional narrow approach to talent management by many companies leads on to two related problems that negatively affect people management: 1. unconscious bias and 2. an assumption by managers that employees (including your ‘high potential’ employees) are ‘willing pawns’ in the company’s talent management game.
Let’s start with the second of these two problems: the assumption that employees (including your ‘high potential’ employees) are willing pawns in the talent management programme.
Traditionally, it’s assumed that ambitious and talented employees want to get to the top of the corporate ladder at their company, so they’ll do whatever it takes to get there and they’ll wait patiently for the opportunity.
If this really was ever true, then it no longer is with Gen-X and Millennials.
Now, talented employees want what they want and they want it when they want it. They won’t wait around forever, nor will they take any job that you give them just because the salary is great or the job has a senior title. Increasingly, they want to do meaningful work and work that aligns to their passions and interests. For them, this doesn’t always mean a linear career path at any one organisation or in any one industry.
As a result, this can make long-term career-planning and succession-planning increasingly complex and difficult for companies to plan and execute.
Also, if companies want to increase the diversity of their workforce, especially at a leadership level, they’ll have to embrace flexible working models — not everyone wants to work every waking hour to win and keep a senior role at a company (for example, single parents, working mothers, people with serious non-work activities like sports competition, etc).
The old model [namely, the ‘old school’ model of what a ‘high potential’ employee is for an organisation, what such an employee must be willing to sacrifice to ‘fit in’ to the leadership culture and how an organisation structures such an employee’s career development] is no longer applicable for all top talent or employees, given the realities of today’s world-of-work and the workforce that make up top talent in it.
In regard to the first of the two problems mentioned above, let’s turn to ‘unconscious bias’ in talent management.
Where human beings are concerned unconscious bias always is a risk, including when tasked with hiring new employees and developing future talent within the company. Not only do organisations (through the people in it) risk focusing on too narrow a band of their employees when implementing talent management initiatives, but also they risk focusing on too narrow a band of external candidates when assessing and selecting new hires. People tend to pick people whom they like and can relate to — for most people means picking people who are just like themselves.
In companies where senior management play a role in selecting new hires and internal promotions, this means that the potential for unconscious bias is driven by a very small group of individuals within the company. As a result, any bias shown in selecting and developing talent will be even more pronounced.
The result of such bias within a company can be a homogeneous pool of talent that fails to reflect the diversity of the population in the local geography or in the company’s customer base. For a highly publicized example of this, think of the attention being paid to Silicon Valley’s diversity problems (which applies for the tech’ sector world-wide), where anyone who isn’t male, Caucasian and middle/upper class tends to be under-represented by tech’ employers: WHY CAN’T SILICON VALLEY SOLVE ITS DIVERSITY PROBLEM? The New Yorker.
Another significant factor for doing talent management effectively is the challenge of actually defining what ‘talent’ means and what it means for any particular skill, job, organisation, or industry.
Trying to define ‘talent’ is a bit like St Augustine of Hippo’s reply when he was asked to define what ‘time’ is: “If no one asks me, I know; but if any person should require me to tell him, I cannot.”
Interestingly, between several business and psychology books on talent that we’ve read, none provides a specific explanation of what talent actually is. Clearly, there’s a link between what we mean by ‘talent’ and smart, clever, hard working, and innovative individuals who demonstrate high potential and exceptional performance in their work. But exactly what ‘high potential’ and ‘exceptional performance’ mean for any one job or organisation will vary a great deal.
What is clear is that how one organisation (or industry) defines talent will not necessarily be the same for any other organisation, as well as the fact that the appropriate frameworks for talent management and performance management, etc, will vary by job function and organisation.
This means that each company needs to do for itself the hard work of identifying and profiling what ‘talent’ means for each role in the organisation and more generally what it means for the organisation itself. Industry and professional standards will help resolve this to some degree, but they are not a substitute for the work each line manager and every organisation needs to do in order to ensure they have defined ‘talent’ correctly for each of their jobs, divisions and organisation.
There are no shortcuts or ‘copy-&-paste’ templates to work out what ‘talent’ means for your organisation!
Yet many HR teams and companies do adopt a ‘cut-&-paste’ approach to their job descriptions and talent management programs… that’s if they even try to define what ‘talent’ means for their organisation at all, as sadly many don’t even make such an effort at all.
The Future Challenges For Talent Management Strategy: “Did I Ask Too Much, More Than A Lot?”
If a fresh approach to talent management is needed, then we need to question the assumptions underlying the principles of the traditional approach and model for talent management, in order to establish which of these are no longer relevant in The New Normal business environment. These questions include:
- Do we have a clear sense of what we mean by ‘talent’ and ‘high potential’ in the context of a particular job, for our organisation, for our industry, or in the relevant geography?
- Do we have a clear, comprehensive and strong talent management strategy in place? Does it include a comprehensive and effective talent attraction and acquisition strategy? If we don’t, then is it realistic to think we can continue to operate without one and still meet our organisation’s short, medium and long-term talent and skills needs? [BTW, that last question is rhetorical, as clearly the answer is ‘No’!]
- Can we really identify all ‘high potential’ employees early in their career at our organisation (or even when we’re hiring them)? Can we know this so early on as to who is going to be suitable for management and/or leadership potential? Does our talent management model allow for flexibility to change who is identified as ‘high potential’ as people’s performance changes or, perhaps more importantly, as the context for performance changes in the industry?
- Is the way we assess people for talent and skills working: when hiring them or when assessing them for promotion?
- Is promoting young talent into senior roles quickly actually good for the organisation (or for their career too)? Is delaying the promotion of young talent to accommodate older employees in that role good for the organisation instead?
- Is it enough for talent management to focus on a narrow band of ‘high potential’ employees, especially mostly at the leadership level only? In other words, if we get the leadership right is that enough? Or for a sustainable approach to talent management and organisational performance do we need to include more employees in our talent management programs?
- Can an individual’s career moves be planned well ahead and are these individuals willing to be ‘pawns’ in the organisation’s talent management game? Are the organisation’s needs actually aligned to and the same as the individuals career plans and interests? Can an organisation’s talent management programme accommodate the complexity of an individual person’s needs, passions, and interests (which tend to change according the context of the employee’s own stage in their life-cycle)? Is the idea of systematic career development realistic and, if it is, should it be managed by the company (i.e. should it be centralised or de-centralised) or by the employee themselves? And if it’s to be managed by employees themselves, how can companies build scalable talent management systems to support and track this approach?
As well as acknowledge what aspects of the traditional talent management model may no longer work, we also need to identify the new factors in skills and talent that have changed over the last 10+ years and which now are affecting what employers need in new hires and how they’re impacting the labour market skills shortage in many countries. These skills and labour market change-factors include the following BIG trends:
- Knowledge (& Service) Work: Across all sectors and jobs, employers are requiring increased skill levels from their employees ane the candidates who apply to their vacancies. McKinsey call this trend ‘skills inflation’. McKinsey go on to distinguish between the increasing number of jobs that now require ‘interaction work’ compared with traditional ‘transcation-based’ work (where the nature of the work is routine, ‘automated’, or scripted). The nature of ‘interaction work’ jobs is non-routine, they involve a lot of people-interaction and collaboration, complex decision-making and an appreciation of context. By 2020, the European Centre for Vocational Training projects that 81% of all European jobs will require “medium and high level qualifications” due to the continuing shift to knowledge work and increasing complexity of jobs. Compare this to 50 years ago, when the proportion of the jobs requiring medium to high level qualifications would have been 30% or less! In the USA’s economy, between 2001 to 2009, net 4.1 million new high-skill ‘interaction jobs’ were created compared to the net loss of 2.7 million low-skill ‘transactional’ jobs.
- Globalisation, Glocalisation & Technology: Part of the reason that jobs are becoming more complex and now require higher skill levels is due to the effect of globalisation and technology, which are making the different national economies more interconnected while it’s disrupting traditional ways of doing work. Also, these two mega-trends make more and more work increasingly specialised thus requiring more deep domain expertise and broader functional skills for any particular job or industry.
- Digital Skills: This disruptive and fast growing segment of the economy requires highly skilled technical professionals, as well as employees with high EQ (and IQ) skills for producing social media content, engagement and marketing. Increasingly, traditional industries are having to move into the e-commerce and digital space, like financial services is moving fast into FinTech’. So these traditional companies need similarly high-level technical and business skills as the tech’ companies. Given the ‘youthful nature’ of those in the labour market with suitable digital skills and fluency, this means the ‘war for talent’ in the Millennial (and Gen-X) labour market is only going to heat up.
- Agile Thinking: We’re living in uncertain and disruptive times, whether this is in politics, culture, economics, business, media or technology. In such uncertain times there’s a premium for agile practices, like: multiple scenario planning, innovative thinking, and managing complexity or paradox. This means there’s a premium for employees who have the IQ and EQ to adapt accordingly and can execute effectively in these skills-sets on what ever projects or challenges that face them.
- Interpersonal & Communication Skills: The skills employers require of their employee both today and in the future increasingly include teamwork and collaboration, excellent communication, innovative thinking, and contextual decision-making. Having good IQ, EQ and the ability to manage networks (of colleagues, surbordinates, suppliers, clients and customers, as well as other stakeholders) mean the difference between an employee being effective and productive or not.
- Quality & Quantity (of Quality) Graduates: A McKinsey report in 2012 identifies that the 70 countries that make up 96% of GDP will experience a global shortfall of 38 million college-educated workers by 2020, while developed economies alone will be short by 16 million in 2020 (and it’ll be a 1.5 million shortfall in the USA by 2020). This shortfall will still happen despite a doubling of the tertiary educated global workforce since the 1980s. Demand is outpacing supply! It’s outpacing supply because of the growth in the knowledge economy and of knowledge-intensive jobs. However, the problem isn’t only that the global education system isn’t producing enough supply of skilled workers, but it’s also that the quality of too many of these graduates is below that required by employers (or they are qualified in a way that is disconnected from the skills that employers actually now need in the workplace). For example, the International Institute for Labour Studies says that only 25% of Indian graduates and only 20% of Russian graduates are employable by multinational hiring standards; while 31% of China’s graduates and 36% of South Africa’s graduate are still unemployed after graduating. Too many of the graduates being ‘pumped out’ of educational institutions are not considered employable, by either mulitnational and local employers.
- Demographic Trends: As we discussed in our previous article (‘Houston, We’ve Got A Problem’: Talent Management Trends & The New Normal — Part-1) by 2030 due to the aging population, the global workforce is predicted to decrease in overall numbers, while the demand for the number of employees with high-level skills is expected to keep dramatically increasing. This mega-trend is already happening! The WEF predicts that by 2020 for every 5 workers who retire, only 4 young workers will enter the labour market. The US Census Bureau predicts that, between 2010 to 2030, 10,000 American workers will retire every single day! This massive demographic change happening across the world means that companies are going have to seriously rethink the way they manage their human capital!
Conclusion: “Don’t Be Afraid”
Today, as HR practitioners and business leaders, we all live in The New Normal business environment which is a VUCA world of: Volatility, Uncertainty, Complexity, Ambiguity. This environment is ‘the new normal’ that all we have to learn how to operate in and to deliver effective talent management programs within.
In order to operate in such a world, we need to have a clear idea of what the landscape looks like and how we might navigate it. This means we’re required to do the ongoing work of researching and learning about the trends that are disrupting all aspects of human capital and business, then turning this learning into a strong and coherent talent management strategy that is fit for purpose in a VUCA world.
Remember, to some degree, we can look to outsource some of this research and strategy work, as we can’t all be experts in everything!
(Remember too, you can always get in touch with us at Hi5 and chat to our in-house experts to find out more in how digital media and smart tech’ can provide scalable solutions to your HR and people management challenges.)
Despite a strong talent management strategy being so important for organisational success, Emily Lawson, of McKinsey, says: “I can count on the fingers of two hands the robust talent strategies that I have actually seen — where the numbers have been done robustly and are modelled 3 to 5 years out where it is clearly understood what it is going to take to compete in a particular market. I think it is very hard. Talent strategies take a long time to play out. There is still a misalignment between what goes on inside companies and what would strategically benefit them in terms of talent.”
Yes, the fast pace and uncertainties of the current business world and society make it very difficult and challenging for a business to understand the landscape, then to implement a talent strategy and finally assess its effectiveness. But what’s the alternative?
A 2012 study by McKinsey into human capital practices found that only 32% of HR managers had “high confidence” in their organisation’s talent strategy and activities. The study also found that many HR professionals feel nearly “paraylsed” by the nature and size of the challenges facing them, especially for the talent management function, as well as unable to keep up the pace of change in the business environment and wider societal changes.
Given everything that’s happening in the world and the many disruptive changes we are all experiencing in our professional and personal lives, it’s not suprising that HR professionals (as well as most other people in management and leadership roles) feel daunted and overwhelmed by the scale of the challenge facing us in talent management. But, nonetheless, change and adapt we all must!
We hope that this article helps you soon being able to paraphrase a Jay-z rap lyric, “I’ve got 99 problems / but a [Talent Management Strategy] ain’t one!”
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