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DEVELOPING TALENT

D eveloping the right talent and doing so in the right way is criti- cal to the eff ectiveness of every organ ization. For a long time the iconic talent development and management organ izations were

the career- oriented ones; human resources (HR) articles and books were full of reports on the programs run by AT&T, General Electric, IBM, Procter & Gamble, and other corporations that had well- developed career development models. Th ese organ izations did an outstanding job of identifying the talent that needed to be developed, specifying what skills needed to be learned, and providing the kind of learning experi- ences that would develop the skills they needed. Th ey provided the benchmarks against which many companies evaluated their talent de- velopment programs.

To say that things have changed with re spect to what should be done in the area of talent development is an understatement. No longer are the talent models that were considered benchmarks looked to as best practices. Today they are seen as outdated and, in most cases, inappro- priate given today’s work and workers. Th e major reason for this is the many changes that have occurred in the workforce, as well as the devel- opment of new technology and the need for organ izations to be agile. Simply stated, long- term company- wide career development programs like those that dominated the best practice lit er a ture in the last half century simply do not fi t today; they fail to provide the talent motiva- tion and agility that organ izations need. Th is, of course raises a key question: What is the right approach today, and what is likely to be the best practice in the future?

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C o p y r i g h t 2 0 1 7 . B e r r e t t - K o e h l e r P u b l i s h e r s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 5/10/2020 12:06 AM via TRIDENT UNIVERSITY AN: 1457718 ; Lawler, Edward E..; Reinventing Talent Management : Principles and Practices for the New World of Work Account: s3642728.main.ehost

Developing Talent 61

S T R AT E G Y- D R I V E N TA L E N T

Th e best starting point for thinking about the best talent development practices is to examine the organ ization’s business strategy and the rate of change it expects to experience. It should determine what kind of tal- ent development activities an organ ization engages in, who should be developed, and what kind of development candidates will receive. Th e focus needs to be on the identifi cation of the skills an organ ization needs to be eff ective and how it should position itself with re spect to obtaining those skills.

Th e strategic analy sis should begin by identifying what the key levels and kinds of per for mance are for the organ ization and how long they are likely to be needed; it should then, based on this analy sis, identify what key skills the organ ization needs. Th e analy sis should focus on determining the business skills, technical skills, and customer ser vice skills that are key to the execution of the business strategy. Clearly these skills should get the highest priority with re spect to development.

Once an analy sis has been done that determines the needed skills, it is impor tant to look at the pool of individuals with those skills. It is likely that some of the skills can be easily obtained in the labor market while others cannot, either because they are idiosyncratic to the organ- ization or because market demand for them is strong.

Aft er an organ ization has completed an analy sis that looks at the skills it needs and the degree to which they are available in the labor market, it can then proceed to working on a plan for developing and obtaining the talent it needs. Th is is easier to say than it is to execute, but the key here is that an organ ization should commit to developing only skilled talent that cannot be easily obtained in the labor market. Further, the focus should be on skills that are critical to the overall suc- cess of the organ ization and implementation of its strategy.

T H E TA L E N T M I X

A key strategic issue for any organ ization is what mix of talent develop- ment and employment models it should have. What kind and how many, if any, employees should be treated as development candidates and core employees of the organ ization, and what kind and how many should be

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62 Reinventing Talent Management

treated as “traditional” employees? How many and what kind should be part- time, temporary contractors, or gig workers? Th e answers to these questions depend on what kind of business strategy the organ ization has and the environment that it faces. Making the right choices is criti- cal to an organ ization’s ability to be eff ective in the long term. Wrongly investing in talent is a sure route to unsustainable costs and economic prob lems, as is not investing in developing skilled talent that is not read- ily available in the labor market. Having the right kind and amount of talent is the road to orga nizational eff ectiveness.

Th e key issue for an organ ization is identifying and positioning itself where it should be in terms of the number and type of employees that it has in its diff er ent talent development, retention, and employment mod- els. It must decide which kind of skills and competencies fall in the ac- tive com pany development area and which can be obtained in the labor market. Th is is where supply and demand in the labor market becomes critical and the issue of the core competencies of the organ ization comes into play. A general rule is that if talent can be obtained in the labor market, it should be.

Correctly positioning an organ ization with re spect to its talent mix strategy increasingly requires it to have multiple talent models. Talent segmentation is required to refl ect the realities of the labor market, the changing nature of skills the organ ization needs, and the agility de- mands that the organ ization faces. Th is is not a new situation; most organ izations have operated with several diff er ent types of talent devel- opment models for de cades. Organ izations typically have approaches for their salaried employees that diff er from what they have for their hourly ones. What is new is the reasons for having segmentation and the types and extent of segmentation that are needed.

In the future, segmentation needs to be practiced by most organ- izations and be based not on hierarchy but on an organ ization’s strat- egy, the labor market, and its needs for agility. Th is will mean that hierarchy and tradition will be much less impor tant in determining the types of employment deals an organ ization off ers, and it most certainly will lead to it off ering multiple deals. Th e segmentation may be like that in the motion picture business and construction industries, which have always had multiple, very diff er ent, development models for their tal- ent. Th ey invest in some employees (e.g., producers or se nior man ag ers,

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Developing Talent 63

respectively), while others (e.g., actors or building contractors) are “on their own,” and in some cases rely on unions for training and ben- efi ts. Strategic segmentation of talent management is a major change for many organ izations; it requires a well- articulated strategic message and strong leadership on the part of HR and the se nior management leadership team.

O N B O A R D I N G A N D R E TA I N I N G TA L E N T

An organ ization’s talent development principles should be obvious to job candidates at the time of hiring. As noted, most organ izations need to off er multiple employee development arrangements that are strategy driven. Th ese can range from almost guaranteed lifetime em- ployment with continued development and growth opportunities to short- term, no- training, and no- employment- guarantee deals. Th e key is making it clear to all potential and existing employees what the ar- rangement is for them. Th e arrangement does not have to be a perma- nent one; it can change, and talent may move to a new arrangement aft er hiring. Further, the arrangement can change based on the needs and skills of talent, and the needs of the organ ization, but it is impor tant that at all times individuals know what their current talent development ar- rangement is and what they can count on from the organ ization.

A leader in making its talent arrangements clear to employees is Net- fl ix, which has an extensive website that makes it very clear to employ- ees what the development model is. Most of Netfl ix’s employees are covered by a model that places most of the responsibility for develop- ment on the employees and gives them no guarantee of a job or of further development. It does not feel it can guarantee long- term em- ployment or a career with the organ ization, but on the other hand, it off ers employees in ter est ing work and high pay. Th e reason for this is that Netfl ix’s business is changing rapidly (it has gone from merely rent- ing DVDs to streaming and producing content) and the com pany does not feel it can make a reasonable long- term commitment to either em- ployment or to developing the skills individuals need to be successful in the future. What Netfl ix can commit to is telling individuals where it thinks the business is going and what the key skill and talent issues are likely to be in the future.

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64 Reinventing Talent Management

Th e Netfl ix model fi ts the industry that the com pany is in: entertain- ment, an industry that is always and increasingly changing. Th us Net- fl ix is, in many ways, just refl ecting the realities of the business world it faces. It has a business strategy and talent development strategy that fi ts the rapidly changing environment it is in and the kind of technology and management skills it needs to be successful.

Th e onboarding pro cess can only go so far in terms of getting the right retention message to talent, but it is the right stage at which to take a fi rst step. From the beginning, employees should be given a clear mes- sage about what kind of future they can expect. Th is is particularly impor tant for talent that makes a diff erence in orga nizational per for- mance. Th ese employees should receive a clear indication of the organ- ization’s commitment to their development and be given promises of regular ongoing career advice and encouragement. Employees who are not seen as pivotal or making a signifi cant per for mance diff erence should be given a clear commitment concerning how they will be treated as long as they are with the organ ization. For example, an organ ization can say to them that they will be fairly paid and rewarded as long as they are needed by the organ ization and perform well. Th ey also can be promised that they will be told as soon as pos si ble about any changes that will aff ect their employment status.

Of course, a strong onboarding program is not a substitute for the ongoing, day- to- day, eff ective management of talent, but it is the criti- cal fi rst step in establishing the kind of relationship that an organ ization needs to have with its employees. Th e onboarding pro cess should begin before the individual is actually hired, and a realistic job preview should be the fi rst step in the pro cess. Once individuals join the organ ization, it is time to further develop their understanding of what career options are available, make sure that they know how to get career advice and input, and provide an environment that has meaningful and appropri- ate development opportunities.

All supervisors should be trained and rewarded for their work on de- veloping and retaining individuals. All too oft en this be hav ior is not mea sured and rewarded, and as a result man ag ers do not do what they can and should to coach, direct, and develop their talent.

One key determinant of onboarding success is the initial work envi- ronment that employees enter. It is impor tant that key employees, in

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Developing Talent 65

par tic u lar, enter a positive work environment. Placing them in the right group with the right supervisor is a key step in their development and retention.

One thing that can help individuals get on board in a way that avoids early turnover is to put them in a socially friendly group. Th is can be a virtual group or a company- sponsored in- person socialization group that helps them feel a part of the organ ization and can give answers to their questions. A lot of early turnover of talent is a result of individuals not making any social connections and thus not feeling they are a part of the organ ization’s social network and relationships.

TA R G E T TA L E N T D E V E L O P M E N T

Developing most skills is costly: training time is lost production time, and trainers are expensive, so it is oft en not a good investment to train people when others with comparable skills can be obtained in the labor market. Even if hiring a skilled individual from the outside requires a somewhat higher salary, it can oft en be less expensive from a total cost point of view to hire a skilled individual than to train someone. Th ere are advantages to organization- supported development that have been demonstrated, including increased loyalty to the organ ization and in- creased retention of employees; but oft en in today’s environment these advantages are outweighed by the costs associated with developing and training individuals who are already with the organ ization.

One alternative to com pany development programs is the use of Internet- based training and development programs. CrossKnowledge and Lynda . com are among the many vendors that provide organ izations with programming that is targeted at developing employees. Organ- izations can make development available to individuals and allow them to self- develop. With this approach, organ izations do not have to direct individual talent development or promise anything as a result of it oc- curring. Th us, it is a low- cost, low- risk development activity that may pay off if it leads to individuals acquiring the right skills. It may also make working for the organ izations more attractive and less “risky” because of the development that is available.

It oft en makes sense to base development decisions on an individu- al’s per for mance, but not to target only or primarily poor performers. It

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66 Reinventing Talent Management

should be a meaningful reward for good per for mance and targeted at tal- ent that wants to develop. In any case, before a commitment to skills de- velopment is made, it is impor tant to analyze whether it is worth the cost. When an employee is performing poorly, particularly in an impor tant position, the best solution is oft en replacement. Investment in train- ing and development can be costly and may only lead to slower per- for mance improvement than could be achieved by talent replacement.

Overall there are exceptions, but in most cases if a skill set can be obtained by recruiting somebody new, it is better to proceed in that di- rection than to train and develop an existing employee. Th is does not mean that organ izations in today’s and tomorrow’s environment should not have some career paths that include training and development op- portunities. Th ere are skills for which it may make sense for an organ- ization to build a career development approach, but these are becoming increasingly rare. It is generally true only for skills that are unique to the organ ization.

When an organ ization has a technology leadership position in a par- tic u lar area, it makes sense to focus on skill development. Th ere also may be operational approaches that organ izations take with re spect to management and customer relations that are unique and provide a competitive advantage. Developing these skills in talent is impor tant because they cannot be obtained by getting someone from the job mar- ket and they provide a competitive advantage.

Fi nally, it is impor tant for organ izations to remember that develop- ment can be a great talent retention tool. Due to expense, it might not be the right tool for employees whose relationship to the organ ization is for the short term, but for situations where retention is a key issue (e.g., work and skills that make a diff erence) development can be a power ful retention device.

C A R E E R M O D E L S A N D A G I L I T Y

Once an organ ization has identifi ed the skills it needs, the potential labor market for those skills, and where the organ ization stands with re spect to its ability to gain a competitive advantage, it can develop the correct career and talent development model (or models). Depending upon an organ ization’s need for talent, the pos si ble approaches it can

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Developing Talent 67

use can range from what might be called an app or gig talent develop- ment model to a traditional commitment to employee development.

AT&T is a good example of a com pany that has had to change its career and talent development models. As mentioned earlier, AT&T was once an exemplar of best practices with re spect to career development; it used a model that fi t the slowly changing, regulated phone business. But today it operates in a rapidly changing communications industry. It still talks to talent about careers, but stresses that individuals must own their development and continuously develop themselves. AT&T sup- ports development by off ering fi nancial support for online degrees, so- called nanodegrees (individual online certifi cations), and individual courses. It has also made an eff ort to identify the skills it will need in the future and to make existing employees aware of what those skills will be.

Organ izations that face very rapidly changing work environments, need skills that are relatively available, and have few skills that make a signifi cant diff erence in their per for mance are strong candidates for temporary, contract, and gig employment relationships. Some organ- izations facing this situation have used a tour- of- duty relationship that is characterized by no commitment to long- term employment and little employee development but full- time employee status for as long as the “tour” lasts.

Gig and tour- of- duty organ izations need some core individuals who maintain the culture and norms of the organ ization and develop the long- term strategy of the business. But the bulk of their employees have an employment deal that keeps them as long as they have the right skills and are needed for the operations that the organ ization engages in.

In a gig or tour- of- duty organ ization, who are likely to be the critical employees? Typically, they are the se nior man ag ers who are working on the long- term strategy and survivability of the organ ization and any employees that are doing things that are uniquely impor tant to the organ ization’s product development and delivery activities. Th e career talent development model for individuals who are doing impor tant, high- value- added work should include long- term employment deals and development opportunities. Such an employment and career development relationship may look very much like the old General Electric and IBM models or perhaps the newer AT&T model. These

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68 Reinventing Talent Management

individuals are likely to be a very small percentage of the total employ- ees in an organ ization, and they are likely to be the most expensive employees because of the cost of their development. In comparison, most of the employees will have relatively low talent costs because of low development expense and little focus on talent retention.

What organ izations fi t into the gig/tour- of- duty category? Certainly organ izations that actually provide temporary labor to other organ- izations and those that off er many ser vices fi t in this category. Th ey in- clude temporary employment agencies like Upwork, as well as on- call ser vice fi rms such as Uber. Th ese organ izations keep their development costs at a minimum by simply making available a platform for individu- als to make deals with customers for their ser vices. In the case of gig work, there is the legal issue of whether the talent should be treated as employees of the com pany; but even if they are employees, which in many cases they are not, it does not make sense for the employer to in- vest heavi ly in their development. Other types of organ izations that use the tour- of- duty model include fi rms that develop and utilize rapidly changing technologies, do proj ect work or construction work, are in the entertainment industry, or off er seasonal ser vices.

One way to think about the diff er ent types of talent development mod- els is to contrast what the organ izations that adopt them look like. With a traditional model, most individuals are long- term employees whom the organ ization is willing to invest in and develop. With the gig model, there is a small number of core employees, and the organ ization invests in their skills, but it depends on gig or contract employees to do most of the work. Both of these models are potentially eff ective approaches to career and talent development—as, of course, are multiple intermediary models. Th e key strategy issue is fi nding the right combination of talent development practices so that an organ ization can achieve a competitive advantage that is based on one or more of the following capabilities: agility, speed, technical knowledge, cost, and product quality.

R E TA I N I N G TA L E N T

A major issue in talent development is talent retention. Turnover is ex- pensive from an administrative and development point of view, but its greatest expense oft en is the productivity of the talent that is lost. Of

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Developing Talent 69

course, there is enormous variance in the value of talent. In some cases there may be little lost value because the individual who leaves does not have skills, abilities, or per for mance levels that are diffi cult to fi nd in the labor market. On the other hand, if the individual had unique skills and a high level of per for mance, that loss of talent may be ex- tremely costly. Th e implications of the costs that are associated with talent retention and loss are clear. Organ izations need to carefully monitor the cost of replacing their talent and behave accordingly— that is, they need to do every thing they can to retain individuals for whom the cost of replacement is high.

Th ere is an enormous amount of theory and research on why indi- viduals leave organ izations. It starts with the basic point that job satis- faction is strongly related to turnover— unhappy employees leave, and happy employees stay. Th is raises the issue of what makes employees happy. Th ere is a large body of research on this that shows that there is no one thing that determines satisfaction, but it is pos si ble to identify some key factors. Th ese include the nature of the work employees are doing, the rewards they receive, and how they are treated by their su- pervisors. It also is infl uenced by the type of career and development opportunities that employees are off ered. Th e opportunity to develop and pro gress in an organ ization can be a power ful satisfaction and re- tention factor.

A very high percentage of employees leave their jobs before they have spent a year with an organ ization. Th is varies widely, of course, by organ ization and type of job. It can be 70  percent or higher, but rarely is it much lower than 25  percent. Th is high early turnover is a result of many factors, and seems to be increasing as a result of the attitudes of younger workers with re spect to their careers. Th ey expect to hold many jobs in their lifetime, and see no prob lem in changing jobs every two to three years. Of course, short tenure may not always be a prob lem for an organ ization, depending on the skills that the individuals have and the ease of replacing them. But in the case of key hard- to- replace talent, the turnover of employees— and especially new ones—is very expensive.

Th ere is little organ izations can do about job off ers their employees re- ceive from other organ izations, but there is a great deal they can do about how their employees are treated and therefore how satisfi ed they are. As is stressed throughout this chapter, those who have key skills need to be

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70 Reinventing Talent Management

treated very well relative to the market. What does this mean? It means that they need to be rewarded well above market levels so that it is highly unlikely they will be off ered a better situation somewhere else. Th e same does not necessarily hold true for other employees, however, and this may lead to issues of perceived internal inequity. Th is is an inevitable conse- quence of strategically targeting skills and talent, a necessity in a talent economy. It should be explained to all talent as being strategy driven.

To identify individuals who are likely to leave, it is impor tant that organ izations undertake regular attitude surveys that mea sure engage- ment and satisfaction. As most surveys are anonymous, they typically do not indicate which individuals are likely candidates for departure, but they can indicate areas and critical skill groups within the organ- ization that are in danger of losing employees. Frequent short online “pulse” surveys can and should be used to track satisfaction and iden- tify actions that are needed. Action then needs to be taken based on the results, and there needs to be a clear link between the survey results and the actions.

Some organ izations have found that they can predict turnover by looking at factors other than job satisfaction— for example, the kind of Internet activity that employees engage in. Looking at job websites, be- ing active on LinkedIn, or certain postings on social media forums may indicate that employees are thinking about leaving the organ ization. Other indicators may be their attendance be hav ior and their per for- mance. Th is is an area where the use of analytics and segmentation can pay big dividends.

Overall it makes a great deal of sense to monitor the be hav ior and at- titudes of all talent, but particularly key talent, to determine whether it is likely to leave the organ ization. Obviously, when it is determined that turnover is likely, steps need to be taken to retain key individuals and groups— particularly those that have critical skills. In short, organ- izations need a targeted retention system that includes indicators of po- tential turnover and corrective actions to be taken.

H U M A N C A P I TA L R E P O RT I N G

As already noted, human capital is an increasingly impor tant orga- nizational asset; in many cases, it is an organ ization’s most impor tant

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