This document builds on a paper for a Talent Summit in September 2008. We have now integrated our guests ideas and acknowledge their invaluable contributions. Fuller acknowledgements are given at the end of this document.
This document addresses two overarching questions:
Our conclusions include:
Softscope1, one of three US mini suite (not full HRM system) vendors linked the words in 1998. Talent management the motivation, management, prediction and focus of special talents goes back to the beginnings of human history but it gained a semitechnical status at the collision point of a number of meta-trends: globalisation; increased speed of change; skills shortages; flatter structures; increasing diversity gender, age, ethnicity; more use of increasingly sophisticated technology; a need to differentiate in competitive economies.
The last 40 years of business transformation have created a situation in which people skills and attributes are one of the main sources of sustainable competitive advantage. This has led to huge growth in internal and external human resource interventions such as coaching and mentoring. Talent management grew with, and was hugely influenced by, the competency movement.
The outcomes havent been impressive. Leadership is a key talent issue. 85% of large corporates run leadership development programmes1. Research from the Division of Occupational Psychology of the British Psychological Society suggested a spend of over £1 billion on management and leadership development more than two years ago. Yet 43% of workers have no faith in their leaders. The idea of aberrant leadership has been popularised by thinkers such as Bob Hogan and Adrian Furnham.
3.1. What do we mean by talent(s) now?
There are as many definitions, it seems to me, as there are pebbles on Brighton beach.
Technical terms in any field allow us to explain or notice things that previously went unnoticed, were not considered important or seemed insoluble. Four things can happen to new terms. They:
We would argue that 3 seems to have happened to talent: but it would be a mistake to leave things there. Talent needs to be unpacked.
As the quotation at the beginning of this section suggests there are too many dictionary definitions of talent. In fact the same document gives a typical one:
Talent consists of the individuals who can make a difference to organisational performance, either through their immediate contribution or, in the longer term, by demonstrating the highest levels of potential.
This begs the question isnt that everyone? And if it isnt, by using such a definition of talent, we imply that people who arent on a talent programme dont make an impact on performance or work to their highest levels of potential. Talent programmes exclude and demotivate as well
Giving examples of talent compounds the problem. In pharmaceutical companies in the 1950s it was to do with very specialist knowledge, exceptional skills and sometimes aberrant behaviour. Now, the word is used in a bewildering number of ways. They overlap in places but talent is used to denote:
Existing leaders who need support and growth.
High performers who need to be attracted and retained.
Future leaders the thorny issue of succession.
Boffins and specialists whose special knowledge means special treatment; theres a supply and demand issue.
Entrepreneurs or potential entrepreneurs since these are stars - rare and special.
Outsourced organisations since talent is expensive and you cant employ it all.
Everyone since everyone contributes and everyone has a talent.
None of these are fanciful and we can begin to see how these different talent segments, an analogy to the techniques of segmenting customers and markets, might be more or less important at different times, in different industries.
By beginning to look at talent in this way, we can avoid the implied labelling of people as non talent while recognising what every manager knows; certain people contribute hugely in specific circumstances.
If, from the outside, talent looks exclusive and talented people on a programme look privileged, from the inside things can look extremely different.
Talent management has, in many cases, become a way of packaging and commoditising certain skills and abilities. Selection methods and talent programmes often focus on very specific abilities. Individual people are seen as containers of these skills or abilities. Because rewards are high and there is a lot at stake for organisations, as well as for individual talent and functional managers, less notice may be paid to the issues, problems and concerns faced by the talented individual.
Our talent round table raised this issue and gave a very specific example. The NHS employs 1.3 million staff and is the largest employer in the world, spending £3.5 million annually on learning. The NHS if anywhere depends on talent: skilled surgeons, clinicians, consultants and nurses; gifted managers; a huge range of people who combine technical knowledge with sophisticated customer/people skills. Yet the casualty rate is huge: people leave the NHS because of overwhelming paper work, the lack of time to practice their skills, over-long working, and the sense of not being in control of their own destiny. In some cases, these derailers of talent map on to the very service theyre offering: alcoholism, stress, heart disease and drug abuse.
Many sectors depend on talent and then treat it as a disposable resource: this is especially true of public sector services like health, education and social care but it happens equally in finance, the creative professions and if statistics quoted by US psychologist Bob Hogan are correct areas such as leadership
While great rewards bring their own responsibilities, it can be argued that the commoditisation of talent has gone too far. The growth of large numbers of off-the-shelf computerised competency structures available from many international suppliers and used without contextualisation has tended to further commoditise talent management programmes, building them around the same measures of excellence.
Talented people (however you define them) are both talented and people.
Is a talent management programme focused on meeting organisational needs now, tomorrow or in five years time? Is it strategic, tactical or both? Does it concentrate on maximising existing staff: recruiting to the same specification as present successful incumbents or recruiting for projected changes?
This is easy to write, but the difficulty of recruiting and developing a new generation of managers for a projected change of industry direction in 5-10 years time is not to be underestimated. As one of the guests at our round table suggested, time horizons are now down to around 1-2 years.
This highlights the role of prediction in talent handling. Can we predict the needs of a business in 5 or 10 years time? And, equally importantly how sure can we be about predictions of peoples growth, performance and achievements over the same timescale? How much uncertainty is there?
A typical list of general talent strategies might be:
These functions are used with any job or employee. If talent means something, the functions will produce different answers than if they are applied to non-talent.
Alan Greenspan and Teddy Kennedy to choose two examples at random have argued for the crucial economic importance of unskilled (which might be viewed as non-talent) workers as a group. But organisations value individual skilled workers more highly than individual unskilled workers. The outputs of the processes listed above will privilege them: give them quicker promotion, higher salaries, more incentives to engage.
This may well be the right thing to do but it requires careful internal marketing and a very sharp focus if its not to have unintended consequences.
Its apparent that the theory, rhetoric and language of talent poses problems. We therefore want to model a different way of looking at and addressing the issue.
The word talent is inadequate and has certain unfortunate implications, but were stuck with it unless any of us can think of another one.
Talent, like leadership, is situational. Before implementing a talent management strategy, any organisation must relate talent to the particular needs of the organisation through a contextual analysis (see below).
To gloss and extend an earlier Crelos definition:
A (continually) evolving set of processes by which businesses identify, attract, develop and retain people with the key (soft and hard) skills to further an organisation towards its (short, medium and long-term) strategic goal(s) (which are crucial in a particular industry and at a particular stage in the business cycle). (These skills and talents will continually change as circumstances change).
This definition removes talent exclusivity by defining talent as contextual and contingent. At different times different skills will be crucial but certain skills WILL contribute more at certain times.
Before we start defining good and superior, and reaching for tests and performance statistics we need to do something else: clarify what we are going to measure against these evaluations. We need a talent description contextualised in time, place and circumstances.
We suggest four talent frameworks which will help to create such a situational description. They are not separate but provide slightly different viewpoints which highlight slightly different issues.
4.3.1. Analysis by industry sector
This is the most obvious situational factor affecting talent definition but also raises some general issues about the place of talent management in strategic planning.
Certain talents are common to most organisations: the components of effective leadership, for instance. But talent looks different in, say, the pharmaceutical and other science-based industries as opposed to the creative industries such as advertising. The present dearth of science graduates impacts hugely on the certain sectors. Specialist communication companies may require scientific literacy or certain specific components of a scientific education but it is unlikely that this is such a core issue.
The CBI/Edexcel Education and Skills Survey 2008 reports that 60% of firms employing scientific, technical, engineering and maths graduates report difficulties in recruitment.
National educational statistics report lower take up of the subjects in schools and universities. Around 30% of larger employers are now recruiting in India and China.
Looking at talent in this way highlights that the focus in its management has been on internal factors. At the risk of quoting ourselves, the Crelos document on Precision Business Psychology sums this issue up:
Approaches to people at work have tended to take an internal perspective: looking at abilities, personality and attributes of individuals, and teams. Of course individual differences and attributes are important...but we need to factor in external issues that effect an individual, a team, a workforce, a particular talent pool or a generation. In doing so we need to create a more dynamic model of human beings at work, one which more easily gears with the dynamic model of business change and future strategy making within which it operates.
This is particularly true of talent. Another example highlights the issue.
The health sector which we discussed earlier on in terms of talent derailers also faces a huge talent shortage. In February 2008 the Health Services Journal reported that some hospitals were having problems even getting candidates to interview for locum doctor roles, due to changes in training. In March the BMA reported that quality of care in the NHS was being threatened by a chronic shortage of junior doctors, which in turn is impacting on the performance of consultants having to work longer hours. The desperate shortage of training posts reported by the BMA in 2005 (in some subjects a reduction of 30% in 8 years) has come home to roost.
Strategic marketing, planning and finance functions analyse their sectors in huge detail. We believe that talent managers should analyse talent issues in the same way, using similar concepts:
Organisations, depending on their size, expertise and resources will tend to concentrate on factors inside the circle, although smaller companies and even some larger ones will invest more in issues of culture, individual and team talent, relationships, engagement and retention. Managing the talent supply requires external research and analysis. An almost constant 30 year revolution in educational arrangements and the structure of qualifications has complicated this area further.
How do talent and these wider external factors interact? Here are some suggestions:
Perhaps the key issue is supply, demand and competition in the talent wars . This is so fundamental we return to it in our section on metaphors for talent.
This sort of sector analysis naturally leads on to a second one.
case study 4.3.2. Time analysis
As our above discussion of the health sector shows, theres a time lag between the start of external policies and trends and their impact on talent pipelines. A further time lag occurs between the introduction of a talent management policy and its effect on an organisation. During this time organisational strategic imperatives will almost certainly have changed.
Talent arrangements take time and if organisational time horizons are reducing to 1-2 years it makes talent managers jobs difficult, if not impossible.
Lets imagine a publishing company which is reviewing its strategies and in parallel looking at the talent requirements, changes in the market and industry will require.
A publisher of hardback books: novels, biographies and non-fiction books in areas such as sport, social history, fashion and style. UK based, it sells overseas and paperback rights via book fairs. Excellent sales of a couple of film stars biographies have given it a good cash and credit position but theyre aware this has, to some extent, been luck. They manufacture in the Far East and employ around 70 staff. The company is owned by the directors in partnership with a VC company after a buy out from a larger group.
Ten year strategic analysis suggests:
The appetite for film stars biographies is rapidly waning.
The most buoyant areas of publishing at the moment are cookery and childrens books but demographics suggest that in five years time, self help books for people aged 50+ will grow hugely.
Sales of printed books will fall in the UK over the next ten years, but grow in emerging economies such as China and India.
Explosive growth is expected in digital books: either for dedicated electronic book readers or for download onto new text-friendly i-pod type devices.
Low literacy levels in the UK are a worry, as is: an absence of digital expertise within the company and a difficulty in recruiting sales staff due to relatively low remuneration packages in publishing as compared with, say, new technology industries.
A simplified initial analysis of the talent needs of the company would need to reflect changing priorities over the next 5 years. The company might decide on the following key actions, which would need further breaking down:
IMMEDIATE: Employ two key publishing staff with a track record in childrens and cookery publishing. Work on and implement a new incentive system for key sales staff. Implement development programme for UK editorial staff to develop possible publishing expertise for redeployment. Use this to identify possible redeployment candidates. Implement diversity training for management team. Work on engagement needed at the start of a programme of fundamental change.
>+1 YEAR: Investigate moving text editorial work to India where a new unit would be set up to handle all editing functions.
+3 YEARS: Recruit (or promote from within) self-help publishing group under an experienced publisher with the range of skills and talents to create and deliver a list in +5 years. Implement development programme for digital publishing expertise for all staff. Recruit digital specialist from IT industry to head up UK end of next 2 years development.
+5 YEARS: Recruit Head of Chinese operation to build digital focused publishing and manufacturing group in China and sell into Chinese market. Develop Indian operation at same time, seeking to promote a new manager from within.
The board of FABELLA has in effect created the outline of a manpower plan. This needs more detailed work to turn it into a talent plan, and the identification of the precise competences and skills needed. But it can be revisited, updated and amended in line with changing business priorities over time.
However, it is only one plan, resting on a series of more or less certain assumptions. William Goldman, the great Hollywood script writer suggested that anyone who claims to be able to predict which films will be successful is a fool. But any functional manager knows that a prediction or plan will be treated as fact the further up the planning cycle it moves.
One of the ways of coping with this is to produce a number of plans based on different assumptions. Marketing and Sales Directors often produce three sales and overhead predictions based on best, worst and median scenarios.
We should therefore be talking about talent and succession plans rather than a plan. At any one time we should be looking at more than one plan each based on different scenarios and assumptions. In the case of FABELLA, one could argue that their assumptions about cookery and childrens books could be overturned by a number of external issues (resource scarcity, growing calls to limit population, the absolute limit on the number of cookery books anyone needs). Equally, Indias cost advantages in certain areas is being eroded.
This does not completely solve the problem of the mismatch between the time taken to build a talent programme and the much shorter cycle of strategic decision-making. Our argument that we need a more 360° view of talent does add more flexibility into the situation. To quote ourselves: Talented people (however you define them) are both talented and people. Define your talent needs very specifically based on one uncertain future scenario, then recruit for those skills, and organisations have very little leeway. Define a number of scenarios, recruit key skills but also look at wider attributes including trainability and learning orientation and its possible to change focus very quickly.
One final point on this. Well-trained HR managers understand risk, uncertainty and the degree of tolerance in predictions as well as and, in some cases better than, other functional managers. BPS Level A training introduces the concept of error in measurement and tools such as Standard Error of Measurement. While these are applied to tests and other measuring tools in their role as predictors of individual performance, it would not take too big a leap to apply them to wider organisational predictions. Looking at alternative talent needs defined by time and varying assumptions suggests another way in which HR and talent staff can impact on overall strategy.
4.3.3. Business cycle analysis
The human requirements of a knowledge start up are very different from those of a fully mature multinational retail organisation. The core skills that will define sustainable future success or failure will be very different.
This curve maps performance over time. It could describe an organisation, a new product, brand or an SBU. The x axis measures time. The y axis tracks generalised performance: separate curves could be drawn for revenues, profit, cash, output and these would look more or less different.
An adapted version of this shape is common to many phenomena in nature, charting the progress from creation to dissolution6. The precise details (the angle of the lines, how long the peak lasts) will change in specific cases: a well-run company for instance will stay at peak performance longer than one which is badly run.
But, for the purposes we have tracked the notional general health of an organisation The curve passes through four stages and, at each stage a different talent strategy might be needed.
Start Up: would probably require creative skills, verbal communication (in small nonbureaucratic teams), energy and good physical health (underrated talents in organisational thinking), informal sales and networking skills. Leadership is paramount in motivating staff through frequent disappointments. One could argue that they key talent set required here is a somatic one: good health, high energy, little need for sleep!
Accelerated Growth: leadership skills become crucial as early pioneers become disenchanted with new arrivals. It suddenly becomes urgent to get succession sorted out since so much is in the heads of the original employees. More specialism takes place and specialised recruitment to capture specific talents becomes central. IT skills to set up transaction, process and recording systems need to be developed. Development programmes replace enthusiasm with professionalism. Legal talent becomes crucial usually outsourced in the UK if IP is involved or large supply chain contracts are central.
The Peak: would require sales, marketing, packaging and management skills. Negotiation would be key. Its also worth noting that at this stage, leadership/strategic skills are crucial in conceptualising what happens when performance dips. Almost certainly high level finance skills are needed to negotiate sources of revenue and handle acquisition, partnership opportunities.
Managing Decline: Here cost control is paramount. If sales and market penetration are falling or staying static, profitability and therefore the justification for the company, can only be supported through cost control.
Obviously the skills mentioned here will be influenced by other factors (the industry sector for instance, how the organisation is organised and run and how far an SBU or subsidiary diverges from the parents core business) but this sort of analysis highlights two linked points:
4.3.4. Competitive advantage analysis
This looks at some of the same issues as business cycle analysis of talent but from a slightly different perspective.
One of the building blocks for ultimate performance is making your organisation different, in a way that customers value, to achieve sustainable competitive advantage. In mature, highly competitive markets with fast communication and concertinaed schedules to market, people are an increasingly important some would say, the crucial element in achieving this.
Talent management strategies are therefore key to wider positioning and differentiating strategies.
This thinking stems from Michael Porters Competitive Advantage Model. The basis of above-average performance within an industry is sustainable competitive advantage. Porter identifies 3 basics types of competitive advantage:
Porters model is extremely valuable but changes in the commercial and wider environment since he developed it and our emphasis on the people aspects of organisational practice, led Crelos to identify four strategies or situations which impact performance.
Each of these will require a different set of core talents.
Pure thinking skills are initially important to define new brands or packaging. But, rather as in a brainstorm, reality-checks and implementation require different sorts of talent creativity, design, customer understanding. research methodologies and very specific knowledge required by technical products, for instance. Since employees are a prime focus of differentiation, psychological understanding is essential here to understand how behaviour can be described and, where necessary, changed.
As we described in the early section on Competitive Advantage, core talent will focus on command and control of processes and squeezing out inefficiencies. Engagement, performance monitoring, implementing systems, changing the way people work, engagement, reducing staff turnover will be key. Talent management will look carefully at the cost benefits of outsourcing or employing talents. IT skills will be crucial.
Recruiting culture, control of the talent pipeline strategy, evaluating resource needs and culture work are crucial. Leadership skills particularly communication become essentials does formal succession planning.
This is like differentiation in that it requires pure thinking skills followed by implementation skills. It may be that new specific technical knowledge needs to be recruited. In M & A, talent pipelines, talent audit, culture and succession planning across structures become key issues. Recent research by Dr Ken Ideus on jvs, highlights the extent to which organisations concentrate on business issues when looking at any sort of structural re-modelling or extension whereas, in the majority of cases, the failure of these activities is down to human issues. So, high levels of human and psychological understanding are key here.
Gareth Morgans seminal book Images of Organization showed how successive metaphors define our view of organisations and help or hinder us in the strategies we undertake. Domination is one of the metaphors he identifies. The image of war is now widely used in discussing talent strategies: the war for talent. This reflects unfettered market models of economic activity and feeds into the competitive advantage analysis we outlined earlier. It also reflects concerns about skills shortages expressed by, among others, the CBI and the Association of Graduate Recruiters.
Does this image really help? It suggests that talent is a captured territory, to be defended perhaps put under martial law.
In fact the situation has become more subtle. It is fairly clear that centralised government in mature Western economies cannot or will not supply all the skills and knowledge required by individuals for a life long job, or by organisations looking for people to contribute to challenging rapidly-changing strategies. Organisations are therefore spending hugely on a range of learning and development interventions, from corporate universities to intensive coaching and mentoring programmes. These are mostly organisation-centric and are designed to give organisations competitive advantage. The need to attract and retain scarce fully formed talent has upped the ante of what they offer and promise. This are tactics guided by the metaphor of war
We think another metaphor works better and suggests a different way of approaching the issue.
Talent is an ecology. It develops and changes. It finds a niche where it can receive the resources (pay, work, values) that cause it to flourish. At a certain point it reaches a maximum population for its niche and stabilises. It needs to adapt to changes in external conditions.
And finally and most importantly, co-operation is as important as competition. Recent advances in negotiation and game theory and in areas such as ethology and complexity theory have provided a more nuanced view of how collective enterprises and ecologies work, replacing a purely competitive model with a more collective one. Perhaps its no surprise that Western views of economic activity are now being challenged in the same way.
This might seem rather theoretical but it has very specific implications for organisations looking for talent.
Talent is a resource to be shepherded, used when its essential and effective. It is more like a living thing in its growth and behaviours; rather than a valuable resource to be grabbed, exploited for all its worth then chucked aside when exhausted. Issues spread beyond organisational boundaries (as natural ecology is an extra-national, extra-species issue) and may need co-operation and negotiation in order to secure supply. We would argue that the simple binary description that either individual companies or the state provides development of talent is out-of-date. Ecologies imply cooperation as well as conflict.
Prediction of people behaviours and of future strategic direction is one of the running themes of this paper. Business analysis describes present situations and then uses trend analysis to predict future needs, levels of activity and results. As it takes its place among core business disciplines, Talent Analysis and Management must equally emphasise prediction.
To quote from our recent paper on Precision Business Psychology:
Increasingly sophisticated technology computer modelling and brain scanning, for instance are driving new findings in areas such as cognition, behaviour, perception, and creativity as well as the behaviour of people in social and organisational situations. We increasingly understand how specific mental processes relate to the physical architecture of the brain and how those physical structures are changed by new learning and experiences. Better information about how the brain works underpins our increasingly sophisticated accounts of how people actually behave. We are moving away from theory-based descriptions towards more sophisticated predictive models of behaviour.
We would argue that this is just one example where a more scientific approach to people issues is needed. Just to give two instances:
This issue was discussed at some length at our Talent Summit, suggesting a more holistic approach to mentoring and coaching drawing on wider psychological understanding of whole human beings. Other points raised included:
To see some of our views on this issue, please see our recent paper on Precision Business Psychology. We will also be producing a range of papers and articles on scientific psychologys contribution to a wider range of work issues.
Throughout this paper we have mentioned a number of practical ways in which talent management can seek to overcome some of the problems associated with this area and can meet the rapidly changing needs of the economic environment. Among these are:
In producing this paper specific contributions have been made by a number of members of the Crelos Talent Network hosted by Ali Gill. A specific thank you to: Barbara Simpson, Reed Sylvester, David Thompson, Sarah Clark, Claire Thompson, Jon Matthews, Ian Florance and Rosalind Ayres.
TALENT: Talent derives from the Greek word talanton meaning scales. This fed into talent a unit of money. Monetary is translated to human value.
Our day-to-day use of the word usually implies something natural, innate, requiring no effort and which is a given. Talent as a gift of the Gods is like wildfire it runs where it will and is difficult to control, predict, motivate.
In business planning we rarely see talent in quite this radically Romantic way. We want to manage , focus and apply it.