Making Your Company a Talent Factory

The war for talent is raging. In the knowledge economy today, it’s people who constitute the principal reason for success or failure of most businesses. But, on the flipside, it’s people or talent as some business pundits call them that’s hardest to manage in more cases than most business leaders may feel comfortable in admitting.

At the heart of this problem is the fact that most businesses have talent management reduced to a mere HR function which the top management pays little attention to. While HR department is responsible for it to a certain extent, the talent management process should be a well co-ordinated, strategic imperative led by the top management team with passion and purpose and the long term ambitions of the company in mind.

Where people are considered merely as cogs of a machine that are easily replaceable, very little happens in terms of leveraging its human capital to drive its performance and growth. In fact, when business leaders adopt such a nonchalant attitude towards people, it only serves to hold back the progress of their organizations.

Douglas A. Ready and Jay A. Conger, two leadership scholars, write in their 2007 HBR article - Make your Company a Talent Factory - about a survey of HR Executives from 40 companies around the world they had conducted in 2005. Practically all of the executives had indicated that they had an insufficient pipeline of high-potential employees to fill strategic management roles. Remember that this is despite 97% of the respondents admitting that they had formal procedures for identifying and developing their next-generation leaders.

When this happens, a company may be forced to let go of great business opportunities. A real estate finance and development firm based in London was planning to take up a major reconstruction job in Berlin - a project that would not only step up their earnings by €500 million over two years but would also represent a sterling opportunity to get a firm footing for undertaking many other projects in that part of the world.

When the executive committee went over the list of people who might be ready to take up such an assignment, it transpired to the CEO that the same names appeared as the only candidates for other critical projects under consideration. When asked for additional prospects, the business unit heads told him, to his dismay, that there weren’t any. The firm’s growth strategy depended on these projects, but the company had failed to groom people to lead them.

While this may sound like an isolated incident, trust me it’s happened more or less to far too many companies across the world and keeps happening even as you read this. Now the problem is all too clear, but how do we address it?

Ready and Conger argue that marrying functionality - rigorous talent processes that support strategic and cultural objectives and vitality - and emotional commitment by management that is reflected in daily actions is the best way to address this and turn your company into a talent factory. Don’t feel disheartened by the big words used here. It’s the language that business scholars generally speak and write in!

When business leaders establish robust systems to scout for, attract, develop, reward and retain talent and adhere to them with almost religious emotional commitment day in and day out, key positions may not stay vacant for aeons. Consumer Products giant, Procter and Gamble and Financial Services behemoth HSBC are two such well-known masters of talent.

When P&G wanted a leader for a rapidly growing joint venture with an entrepreneur in Saudi Arabia, they searched their global database of talent profiles and hit upon five strong potential candidates in a matter of minutes. They succeeded in doing that notwithstanding the fact that the role called for someone with emerging markets experience, who had worked in other countries and in the laundry detergent business, and who’d offer to relocate on short notice to Saudi Arabia.

Look at the complex factors at play here: Market, Culture, Product, Family. The ideal candidate had to have the right balance across all four of them. Sans robust talent processes and emotional commitment from the key stakeholders, just one of these conditions would have been enough to drive the average HR department crazy and go for months on a search knowing well that this could be a hit or miss. In the case of P&G, however, the new manager was settled in just three months after the start of the search.

Irrespective of their different business domains, both P&G and HSBC have linked their talent management processes to their strategy for growth. Although your business is almost minuscule by comparison and without deep pockets, you can still adopt the same principles and achieve sustained performance and growth in your business.