In many global companies, particularly those based in developed markets, it’s found that half of senior leaders will be concluding their careers within the next few years, and half of them don’t have a successor ready or capable to take over.
As Boris Groysberg (a professor of business administration in the Organizational Behaviour unit at the Harvard Business School) puts it, “Companies may not be feeling pain today, but in five or ten years, as people give up work or move on, where will the next generation of leaders come from?”And never a truer word would be spoken in this region, albeit sooner rather than later.
Organizations know that they must have the best talent in order to succeed in a competitive and intricate global economy. It is no mean feat to hire, develop, and retain talented people but few organizations here have an adequate supply of identified key talent or systems in place to control the flow for the next generation of flourishing business leaders.
This point of view was reiterated in one-on-one interviews with top executives, conducted as part of Groysberg study.
This emphasis on talent management is inevitable given that, on average, companies now spend over one-third of their revenues on employee wages and benefits. Your organization can create a new product and it is easily copied. Lower your prices and competitors will follow.
Go after a money-spinning market and someone is there right after you. But replicating a high-quality, extremely engaged workforce is nearly impossible. The ability to effectively hire, retain, deploy, and engage talent—at all levels—is really the only true competitive advantage an organization possesses.
There is a demonstrated relationship between better talents equalling better business performance. Increasingly, organizations seek to quantify the return on their investment in talent.
The result has been a mountain of “proof” that paints a compelling picture of the impact talent has on business performance. To highlight just a few:
– A 2010 study from the Hackett Group found companies that excel at managing talent post earnings that are 15 percent higher than peers.
For an average Fortune 500 company, such an improvement in performance means hundreds of millions of dollars.
– A study from IBM found public companies that are more effective at talent management had higher percentages of financial outperformers than groups of similar sized companies with less effective talent management systems or focus.
– Similarly, a research study from McBassi & Co. revealed that high scorers in five categories of human capital management (leadership practices, employee engagement, knowledge accountability, workforce organization, and learning capacity) posted higher stock market returns and better safety records—two common business goals that are top of mind for today’s higher management.
No talent management system? Relax; it is not that difficult…unless you want it to be!
Attracting, and indeed spotting talented people, engaging them, inspiring high performance, rewarding and retaining them is the key. Today’s leaders effectively need a tertiary degree in talent management.
The science of people leadership has escalated into a rather large pile of frameworks, tools, processes and systems – delivered through MBAs, DBAs, leadership seminars, forums, programs, technologies and networks – all designed to manage that elusive, slippery, challenging team of talented people working with you. Is it really that hard?
When instead of mastering processes, what if you honed your innate social skills to read someone’s mood, empathize with their highs and lows, have conversations, exchange experiences and communicate; even without words.
The first era of talent spotting has been around since time began. For thousands of years, humans made choices about one another on the basis of physical attributes. If you wanted to erect a pyramid, dig a canal, fight a war, or harvest a crop, you chose the fittest, healthiest, strongest people you could find.
Those attributes were easy to assess, and, despite their growing irrelevance to modern work placements, interestingly, it seems we still sub-consciously look for them: Fortune 500 CEOs are on average 2.5 inches taller than the average American, and the statistics on military leaders and country presidents are similar.
Time to go back to basics. If we stop over-thinking the business of managing talent and focus on some simple truths, we may find we are better at this than we give ourselves credit for.
The focus must shift to potential. In a volatile, uncertain, complex, and ambiguous environment (VUCA is the military-acronym-turned-corporate-buzzword), competency-based appraisals and appointments are increasingly insufficient.
What makes someone successful in a particular role today might not tomorrow if the work environment shifts, the company’s strategy changes, or he or she must collaborate with or manage a different group of colleagues, particularly in the GCC.
So the question is not whether your company’s employees and leaders have the right skills; it’s whether they have the potential to learn new ones.
The new era of talent spotting should be one in which our evaluations of one another are based not on brawn, brains, experience, or competencies, but on potential.
How can you tell if a candidate you’ve just met—or a current employee—has potential?
By mining his or her personal and professional history. Conduct in-depth interviews or career discussions, and do thorough reference checks to uncover stories that demonstrate whether the person has (or lacks) these qualities.
For instance, to assess curiosity, don’t just ask, “Are you curious?” Instead, look for signs that the person believes in self-improvement, truly enjoys learning, and is able to recalibrate after mistakes.
Questions like the following can help:
• How do you react when someone challenges you?
• How do you invite input from others on your team?
• What do you do to broaden your thinking, experience, or personal development?
• How do you foster learning in your department?
• What steps do you take to seek out the unknown?
Be absolutely sure you know what you want (knowledge, skills, attributes and organizational culture)
Look in unexpected places: Sometimes you need to think laterally. People tend to play it too safe when they are looking for employees. You can stretch your horizons geographically or into different industries.
Learn to love the ‘jagged CV’: Exceptional talent doesn’t always come in neat packages. It’s easy to spot people with the best grades from the best universities and think that they are the real talent.
However, often it’s the people who have seemingly failed, or dropped out or changed their career paths that are the change-makers. Post-Enron disaster, we should realize that just because they have marvellous transcripts doesn’t mean they are marvellous people.
Don’t be blinded by achievements:
While it’s good to maintain hope and optimism about candidates in the early roles of their career, at the top of an organization due diligence is really important.
Too often employers find someone who makes a very good first impression and then switch from evaluating them to trying to close them down. “Once that switch gets flipped, people don’t want to hear anything that would be a damaging. You end up hiring people who should have been examined more closely.”
Take small, controlled risks: There are lots of different paths to the top, and sometimes you need to take a risk on candidates who might not have the direct experience, but have the talent and ambition.
Therefore, the test is not whether they have the right skills, but whether they have the potential to learn new ones. Potential.
And so to the big question: How do you tell if someone has potential?
The key is to focus on the following:
• The right motivation (real commitment to the pursuit of the right goals)
• Curiosity (seeking new experiences and knowledge, and openness to learning and change)
• Insight (ability to gather and make sense of information that suggests new possibilities)
• Engagement (using emotion and logic to communicate a persuasive vision and connect with people)
• Determination (wherewithal to fight for difficult goals and bounce back from adversity)
Combine all those factors, and for those that learn how to spot potential, effectively retain people who have it, and create development programs to help the best get better, the situation will instead offer an extraordinary opportunity.
Let’s take stock of how we are managing talent and wherever possible, keep it simple. Let’s seek potential and be brave.