The strength of your current and future talent is a great predictor of your business’s success. So, here are 5 simple steps to ensure you build your talent pipeline.
Research continues to show that companies who invest in their own talent create greater returns for their shareholders. One example is a Hewitt Associates study that found:
- Companies whose CEOs reviewed their top talent averaged 22% Total Return to Shareholders over 3 years compared to a negative 4% for companies whose CEOs did not review their top talent.
- Companies that define leadership competencies, assess leadership behaviors and track turnover of top talent yield significantly greater return on sales compared to companies that do not engage in these important activities.
If you are seeking funding, your plan for filling your talent pipeline is a key factor. Sophisticated venture capitalists and acquirers consider this factor as they assess the sustainability of your business and assign a value to it. In 16 years of working with growth business, lack of talent bench strength is the biggest inhibitor to growth (assuming funding is available).
Here 5 steps for filling your talent pipeline. Your success in building your talent pipeline is directly related to your ability to integrate these five steps into the way you do business versus an event-driven approach (i.e., once a year review of talent). Managing your talent pipeline is a broader and more integrated process than simply planning for successors to key positions.
Step 1 – Plan
Like any broad reaching initiative, two critical success factors are senior management involvement and alignment with your business needs and corporate values. Once you are confident that you can incorporate these two factors, consider these items as you plan your approach:
- Company growth goals,
- Size of key talent pool (not necessarily only managers),
- Geographic dispersion of operations,
- Understanding obstacles to developing talent,
- Average vs. desired employee tenure and
- Strength of your employer brand.
Start by analyzing the future needs of your business to ensure your talent pipeline does not lag behind your future needs. Companies commonly design their plans and develop their talent for today’s reality versus tomorrow’s possibilities. Identify the number of positions that are considered critical to achieving your business goals. This will help get your hands around the scope of your talent management initiative.
Next, conduct a “what if” analysis. This analysis will illustrate the impact to your leadership team when a key player leaves. It will also yield a specific picture of the strength of your talent pipeline.
A key to planning is to identify leadership competencies that will help drive the growth of your company. These competencies form the foundation for the following steps and also serve as an explicit statement of your company’s leadership expectations.
This step focuses on creating an employer brand to help potential candidates self-select you as a target employer. Your employer brand describes what kind of employment experience you offer (e.g., innovation, entrepreneurial, family-oriented, competitive). Just like your internal corporate values, your brand should not be for everyone. It should inherently attract those who relate to it and encourage others to look elsewhere.
Another aspect of attraction is reaching out to future employees in order to expand your potential talent pool. Some companies have gone to extremes to do this. Nortel has been known to recruit at rock concerts. Hewlett-Packard and many other technology companies have targeted high school students.
There are many simple, customizable assessment instruments that can supplement management’s judgments with quantitative data regarding a leader’s performance and values. Multi-rater approaches are the most valid and help to overcome resistance by the person being rated. Quantitative data helps you validate nominations to your high potential pool.
Here are four key areas for assessing your talent:
- Job Challenges: What experience should candidates have before assuming a leadership position?
- Organizational Knowledge: What should candidates know about your company before assuming a leadership position?
- Competencies: What will future leaders have to do to achieve your goals? What competencies will be needed to do it?
- Executive Derailers: What makes people fail even if they meet the criteria in 1, 2 and 3 above? Derailers tend to be personality attributes. Business coaches are a good resource to identify derailers and help the employee before they become problems.
For example, at a lower level in the organization, a ‘hard-driver’ may be very successful, but at higher levels this attribute may be offensive and seem arrogant. A ‘micro-manager’ may be very successful when working with subordinates; however, in a peer group of other managers, the peers may rebel against the micro manager’s style.
Do not compromise your standards when you are identifying future leaders for your company or hiring a front line employee for that matter. Conduct periodic reviews of your talent to ensure that your plans are on track, bench strength is sufficient and the right people are still being developed and rewarded appropriately. Use this review process to help design individualized development plans for your high potentials.
Design your development options to target specific levels and competencies. Companies who were best at developing their leaders used these approaches:
- Internal training,
- Executive coaching,
- Cross-functional experiences,
- Job rotations,
- External training and
- Global/regional assignments.
None of the “best practice” companies for developing leaders used formal education as an approach, yet 38% of the comparison companies did use formal education.
Many Millennials expect and demand the fast track. As a result, companies are accelerating the development of their new talent. This “acceleration pool” is typically targeted to a specific level in the organization rather than a specific job.
The content of your development experiences should include: profit/loss responsibility, people management, working with/influencing peers, learning the basics of your business, building and using structure and control systems, building leadership courage, persevering under adverse conditions, negotiation tactics, framing and solving problems and managing former peers or supervisors.
Market your development process internally. Name it (e.g., Advanced Leadership Program or ABC Company University) and create a logo/identity for it. This program should be integrated into your overall development plans for all employees to avoid cynicism about developing only high potentials and ignoring other employees. Use more cost-effective, self-directed methods for developing the majority of your employees. With all of this investment, ensure that you measure their performance and the effectiveness of your talent management initiative.
Reward strategies warrant a dedicated post. Companies that excel at developing their leaders ensure significant compensation differential between top performers and their peers. However, it’s not all about compensation. Tell your top performers who they are, thank them for their contribution, give them exposure to your top management or Board and ensure that they are challenged. Non-cash forms of recognition can serve as a powerful retention tool.
Rome was not built in a day and neither will your talent pipeline. So take baby steps, but get started today.