Optimizing workforce is about more than engagement—it’s about performance.
By Paul H. Eccher
Optimizing talent is a new concept that speaks to the need for organizations to take a strategic and integrated approach to talent management. Vaya Group’s study of more than 400 organizations found that less than 25 percent of companies possess a well-integrated and effective approach to talent management. Vaya identified eight critical components that a company needs to address in order to be a talent optimizer:
1. Leadership. Are senior leaders visibly and actively engaged with, and supportive of, the organization’s talent management activities? Senior executives should focus on role model development. They need to act as mentors and teachers and hold themselves and others accountable for talent management.
2. Culture. Does the culture support talent development and the sharing of talent? Business culture needs to be built on the promotion and sharing of talent. It should also value diversity of talent and view it as an asset.
3. Strategic Alignment. Are talent management strategies and initiatives aligned to the broader strategic plans and objectives of the business? Communicate your talent strategy and ensure its aligned to business goals. Workforce planning and future skills need to be defined and leadership framework needs to be in place.
4. Talent Assessment. Does the organization have objective, standardized mechanisms for assessing the most important skills and behaviors of incumbent leaders and managers, and external candidates? Track competencies at the individual, team and organizational levels and understand where gaps fall. Measure talent quality via external benchmarking and normative data comparisons. Promotion and hiring decisions are supported by rigorous assessment data
5. Learning and Development. Do the learning and development tools and processes effectively support post-assessment and post-feedback development and growth of talent? Development focused on closing Eliminate most important competency gaps to encourage continued development. Mentoring and coaching—if readily available and utilized—is often a successful method.
6. Performance Management. Does the performance management processes effectively measure and provide useful feedback on the right behaviors and skills of the workforce? Deliver candid and focused feedback while implementing clear and specific development plans. Career paths and employee aspirations need to be well understood for succession.
7. Human Resources Capability. Is the HR function viewed as a valued partner relative to talent acquisition, assessment, development, coaching, and deployment? Staff the HR department with skilled organization consultants, expert talent assessors and top-notch executive coaches.
8. Talent Data Analytics. Do data management tools have the capability to analyze the impact of talent management initiatives and efforts? Accurate talent data and sophisticated data analysis allows for analysis linking talent initiatives to business outcomes.
Gaps and Differentiators
When we compared results of organizations in the top and bottom quartiles of business outcomes (diversity, culture, retention, business unit results, customer satisfaction, improved employee engagement, feedback and development) clear gaps were visible. Organizations in the top quartile score nearly 30 percent better than organizations in the bottom quartile on all eight talent optimization levers. This provides more evidence that top quartile talent optimizers also achieve much better business outcomes.
To demonstrate the correlations between business outcomes and the talent optimization framework (TOF), we split the data by organizations with strong TOF ratings and weak TOF ratings. Organizations with strong TOF ratings have a higher percentage reporting positive results while the opposite is true for organizations with low TOF ratings.
To expand on this finding when an organization with average scores in all of the talent optimization levers creates a more supportive culture within their organization we see a 10 percent improvement in business outcomes.
When organizations have a strong supportive culture, strategic alignment, and superb data analytics, the amount of talent diversity tends to increase. Organizations that do well with assessing talent and are able to analyze data on the strengths and development areas of their leaders tend to have the best learning and development results. (Chart 3)
To further expand on the link with business outcomes, external outcomes such as stock prices and best in class awards were examined. Top-quartile talent optimization organizations outperformed the organizations in the bottom quartile of talent optimization each year between 2005 and 2009, and 71 percent were rated a “Most Admired Company” by Fortune Magazine.
When Vaya Group looked at the relationship between talent optimization practices and business outcomes, it found:
• Companies with strong talent optimization practices reported positive business outcomes 91 percent of the time; whereas, companies with weak talent optimization practices reported positive business outcomes only 9 percent of the time.
• In 2008, the stock performance of talent optimizer companies more than doubled the performance of weak talent optimizers, a group deemed talent minimizers.
• Strong talent optimizers were two and one-half times more likely to be on Fortune Magazine’s Most Admired Companies list.
With such as strong relationship between success on these components and positive business outcomes, the TOF provides much needed clarity and structure for ensuring talent initiatives successfully drive tangible and meaningful results.
R. Paul H. Eccher is the co-founder and principal of The Vaya Group and co-author of Optimizing Talent: What Every Leader and Manager Needs to Know to Sustain the Ultimate Workforce (www.optimizingtalent.com)