Building a Distinctive Approach to Strategic Talent Development: Summary of “Best Practices” and Key Learnings
White Paper by Edmund B. Piccolino, Ph.D. Managing Director
Piccolino Associates, LLC
It might be helpful at the onset of our discussion to provide some general thoughts and learning’s from an extensive literature, as well as our professional experience, about what constitutes “best practice” in strategic approaches to talent management, development and succession planning. Below, we have outlined:
- A review of relevant research findings and key learning’s from our collective experience
- Key questions relating to issues that appear to be key drivers in building a truly e ective approach (defined as one that has both validity and a high degree of acceptance).
Building a sophisticated and high impact approach to strategic talent development is, in fact, a very challenging matter, one that few organizations plan and execute e ectively. It involves getting several dimensions or aspects right at the onset, and is far more complex an issue than selecting assessment tools, for example, or defining lists of competencies or building common vocabulary: At the end of the day it is actually a core element and driver for defining an organization’s core business culture.
Our consulting practice has been instrumental in helping organizations build e ective processes and practices to help them achieve a distinctive competitive advantage in talent development. And, we continue to raise the bar and learn: We have been fortunate to have worked with organizations that have build extraordinary leadership bench strength, and who have built towering reputations and external “brands” as talent developers.
In the spirit of stimulating a useful dialogue, we believe a useful starting point would be to summarize some of our key learnings from other engagements and personal experiences with building and supporting strategic talent development initiatives. There are several underlying questions that provide the context for the leadership development and succession issues we are discussing:
- What constitutes “best practice” in the global search for leadership talent?
- What are proven strategies for success and what is the evidence relative to business impact?
- Most relevant to a specific client—how applicable are the learnings and practices of other global corporations and/or professional service firms with distinctive cultures and in some cases partnership structures?
- Closely related, what are some of the major challenges facing a particular client that are causing it to take a more aggressive or systematic approach to strategic talent development?
At the end of the day, what are the key di erentiators between organizations that develop leadership talent well, and ones that do not? What is the relative impact of leadership at the top, well-conceived processes, e ective tools, formal learning programs, experiential assignments and job rotation? Pragmatically, how should informational and administrative issues be managed and tailored to cultural and situational demands?
We are frequently asked a very specific and focused question: “How would we propose to help build a more e ective talent development and succession planning process?” Directly related to this question is the challenge of aggressively tackling diversity—of broadening and enhancing talent sourcing as well as accelerating e ective development of women and minorities.
We know of no business or organization that believes it has an adequate or su cient cadre of leaders. The leaders within most of our clients, however, recognize that their organization literally faces a strategic business imperative to upgrade its senior talent planning and development practices. More specifically:
- This is often a direct function of the growth and success of an organization – and it triggered by concerns about maintaining control and high standards as the geographies and structures become more complex and far removed from the team that built the initial venture or established the core operating culture. It is also a function of the accelerating demands for talent that are associated with growth, be it organic or driven by acquisitions.
- Organization’s that build a strong external and internal “brand” as places that develop talent typically achieve a significant competitive advantage retaining talent, while also becoming less susceptible to the negative e ects of talent poaching (i.e., they have the depth of resources needed).
- Boards of Directors have become significantly more demanding and involved in assessing how e ectively this issue is being managed by key leadership teams. Sometimes this is a very direct requirement of legislation, for example, the much discussed Sarbanes-Oxley Act of 2002, which among other matters, mandates that Engagement Partners in traditional professional financial service firms be transferred from a client audit assignment after a maximum of five years. This development, coupled with the need for transparent integrity in all aspects of financial reporting, is expected to significantly increase the rate of partner “churn” or turnover on assignments. Net net, it is no longer su cient to have perfunctory review conversations or an occasion breakfast meetings – Boards want to know what processes are in place to ensure talent is managed e ectively, and want to see document evidence of their impact or e ectiveness.
- Progress has been made in various initiatives to elevate diversity as a desired outcome. Viewed objectively, however, much more remains to be done to achieve appropriate representation of female and minority talent in key business leadership roles and client assignments. If experience is any guide, current momentum surrounding the diversity issue is typically not su cient.
- Overriding these trends or movements, there is a growing appreciation for the accelerating rate of change and the strategically compelling need for organization’s to build the capacity to adapt and change and to reinvent themselves. And there is much hard evidence to demonstrate that organization’s that do this well achieve and consistently demonstrate superior financial valuation outcomes relative to their competition.
There are a number of classic and uniquely challenging cultural or situational factors associated with upgrading or building a strategic talent development program that make the process especially di cult: Indeed, in our view, building such an e ort really is an example of a major change management initiative!
- The organization’s autonomous operating style and business structure – which has given rise to a plethora of diverse and wide ranging practices and standards – not to mention the incredible inertia associated with tremendous commercial success (e.g., “why should we change?”).
- There is a lack of alignment or ambivalent attitudes relating to the basic transparency of information relating to talent or “people calls.” This is presumably a function of certain cultural beliefs and values relative to high producers or high performers (vs. leaders) with associated stature and status issues. One consequence is that there appears to be a pervasive resistance to ratings (or “rack and stack” processes) that inevitably distribute talent along a continuum – particularly if those practices result in potentially negative and demoralizing messages (not a trivial concern in an environment where high producers are easily poachable or recruitable to competitors). Some cultures pay lip service to the importance of “meritocracy” – but behaviorally they communicate “everyone is an eagle!” Other cultures – particular those with a more paternalistic or nurturing character, tend to foster hidden or mysterious behind the scenes “people calls.”
- Closely related, certain cultures tend to build something of a “star” culture and reputation. Consistent with this, initial attempts to identify talent tend to focus on the “top 10%” – which may be very appropriate in terms of longer term strategic needs, or the pragmatics of beginning a process -- but, some would argue at least, ignores the development needs of the much larger B and C cohorts (and which may have the potential for larger ROI’s).
- There is a lack of specificity or clarity around the goals or key deliverables associated with talent development (e.g., what are we doing this for, and how will we know we succeeded?).
- In some cultures there tends to be a degree of cynicism among some key executives about the basic validity of the process to date, not so much in terms of the need nor the quality of special talent development programs per se – but more focused on the consistency and quality of “the top talent list” itself.
- Many high performing organizations champion an operating culture that features a pervasive resistance to “bureaucratic” or time consuming/administratively burdensome processes. Closely related to this are perceptions and beliefs about the perceived value and time demands associated with “talent management” (e.g., relative to revenue generating activities).
- In many large global organizations, there is no tradition of managing talent strategically as a corporate resource, and no tradition of moving talent across businesses (not to mention the understandable reluctance to even think about giving up key producers).
- Even in talent development oriented organizations, talent review cycles tend to focus on identifying the crème of the crop, and then providing these players the opportunity of attending special (and apparently well designed) talent development program experiences (– at the least an important form of recognition, if not a self- learning opportunity). However, it is well known that assignment management is the most potent level to accelerate and actually influence development -- but there is little consensus or understanding typically about which positions are best suited for learnings, and importantly -- no process to oversee who gets assigned to what roles and opportunities.
Net net, these cultural or historical issues and challenges cannot be ignored in designing an e ective approach to strategic talent management. While it is critical to have core support at the top – the more di cult practical challenge is figuring out how to get the next levels of the organization aligned and engaged in a positive way about the need and a going forward approach. This is no small undertaking in an aggressive, self-directed, bright, impatient, driving and largely transactional culture, nor in more passive or laissez-faire operating organizations.
We have extensive experience designing and implementing strategic talent management initiatives—with a particular focus on leadership. We have learned that this is a major “systems-design” challenge with many critical elements or drivers required to ensure success. A tailored solution that addresses at least three components is essential:
Content and Focus—Defining key business drivers, critical success factors for the firm, the universe of roles, including key competencies and skills, and the case for higher standards and a more intrusive process.
Process—Defining the specific information and enabling tools for collecting data; making assessments, as well as developing “rules of the road” for selection decisions and for exercising quality control.
Engagement and Implementation—Building e ective practices that increase support, facilitate administration and communication—and ensure enthusiastic commitment.
Key Learnings and Beliefs (so called “Best Practices”)
We understand that some executives within a particular client may believe that their business is quite unique and there may exist potential reluctance or resistance to apply the disciplines and approaches of “typical Fortune 50” organizations. Frankly, our belief is that is it extremely important to understand that uniqueness and to tailor a solution to an organization’s readiness and skill levels. (You can’t implement a GE or PepsiCo system which took 30 years to evolve in one bold stroke)!
Nonetheless, we thought it prudent to summarize “key learnings” from our collective experience, as well as recent research findings associated with “best practice” companies.
- There is a compelling business case for e ectively managing the development and career experiences of senior talent: Organizations that focus intensively on developing leaders, in fact, build higher levels of employee engagement, commitment and trust. More importantly, they achieve higher levels of business performance (i.e., measured by customer satisfaction metrics, market share, and traditional financial performance indicators).
- The key enabler is not “tools” or process—instead it is e ective leadership and support at the top (i.e., CEO, BOD).
- Other differentiators appear to be more or less in the “details” of execution (e.g., di erentiation in talent identification and compensation, and providing the right kinds of development assignments at the right times).
- The largest practice discrepancies between “high performing” and average or poorly performing organizations appear to be in the area of how experiential development assignments are managed, (i.e., most acknowledged winners with high talent development profiles and “brand reputations” use assignments aggressively— and at twice the rate of other companies or firms).
- There is widespread agreement that the biggest challenges (and perhaps the actual upside opportunity) lie within the so-called “duck” cohort (i.e., the majority of the talent pool constituting the “B” players vs. the “eagles” and “turkeys”). We suspect this may be true in virtually all kinds of organizations, including financial and professional service firms with strong cohesive cultures.
- Virtually all top performing organizations have abandoned traditional “linear” succession planning practices with designated back-ups, in favor of a more dynamic “talent pool” approach. This is a function of the perceived need to manage talent strategically “at the top,” as well as a recognition of the accelerating rate of organization change.
- Pragmatically, many organizations have learned to focus on teaching managers to use clearly defined and observable performance and potential indicators—including leadership competencies associated with future-oriented positions, such as learning agility and motivation/drive. They also avoid simplistic “chosen-few” or other elitist processes.
- Differences in processes and tools appear to be as diverse as cultures, ranging from highly informal and “seat of the pants” practices, to highly structured and formalistic ones.
- It is important to di erentiate talent on the basis of sustained performance, not just recent experience. Potential is best demonstrated in performance in di erent situations, in di erent assignments and with di erent managers. Considerable evidence exists that managers need professional assistance in identifying
- potential (one widely quoted pundit comments that “...they do not have the talent to make a call on talent.”)
- Tools like forced ranking, and the use of the classic nine-cell Performance-by-Potential Matrix, can be powerful diagnostic and/ or “quality control” mechanisms. Experience teaches that these are tools to be applied judiciously—and are best used to stimulate constructive development planning lest they build destructive churn, fear and disengagement.
- There is an interesting movement to simplify processes and practices, look for example at Bossidy’s recent writings on the need to very brief one page performance reviews; Hollenbeck’s assault on overly complex competency profiles (vs. core competence). And the vast literature on leadership has been summarized productively and heuristically around a relatively short list of factors that have clearly and empirically demonstrated they truly matter when it comes to building high performing teams that sustain high performance.
- Succession planning is essentially a demand-pull process that should use a wide range of tools to track demand, activity and retention. But whatever the mechanisms, we know that secrecy (i.e., poor communications relative to expectations and practices) is highly dysfunctional and corrosive to building engagement and alignment.
- Success at diversity is not a matter of following simple toolkit or workbook. It requires very clear communication about the current environment and business needs, and clearly defined outcomes in terms of organizational goals. This requires leadership at the top, and an infrastructure that supports the strategy (including a coordinated focus on recruitment, projection of needs, development planning, aligned rewards, etc)
The above list of learning’s is not exhaustive and we continue to seek data about innovative practices from other successful organizations. We believe it may be particularly fruitful to review practices of smaller, or relatively autonomous, business units within companies that continually evaluate and nurture excellence in their succession planning practices (e.g., sub-units within GE and Johnson & Johnson, PepsiCo’s initiatives to drive diversity, etc.). Importantly, we are gaining experience with innovative methodologies such as “game planning” which—applied appropriately—help make talent review and succession planning process highly engaging to participants, and e ective drivers of action-plans.
At the end of the day (and beyond the critical importance of e ective leadership support at the top), we believe that the key levers for ensuring the evolution of successful talent management systems are, first o , articulating compelling line of sight strategic business goals and objectives, aggressive assignment management, developing much more rigorously “scrubbed” assessment data (and from multiple sources and observers), engaging (not bureaucratic) supporting processes, and more reflective action learning (a key deliverable of well executed coaching programs). Our experience strongly reinforces the belief that all of these levers must align with and demonstrate a direct linkage to compelling business goals.
Key Questions and Issues Surrounding Drivers of Success
Can we articulate or provide clear examples of successful performance in each segment of our organization? “What does success look like?” “Who are real life heroes who have created jump–shift value, and what is our understanding about what made them successful?” It makes tremendous sense to showcase successful performance and make it an explicit and broadly communicated model. One of the key related learnings here is quite simple – e ective leaders demonstrate competence at what matters in the organization. How important is functional or technical expertise, relative to demonstrated e ectiveness as a general manager?
Strategic talent management is a central element in defining an organization’s de facto operating culture (e.g., are we a place that invests in aggressively growing people?; systematically upgrading or pruning?; do we have the stomach to remove “blockers” from key development roles?; and, how important is leadership actually vs. performance?). Alignment, therefore, is always a key factor – so, at the end of the day, can we articulate a process for talent management that looks and feels aligned with the way the organization actually behaves today? When finished, what are the gaps or risks that seem likely in terms of desired outcomes?
It is very well established the most e ective way to develop talent is through on the job experience. But do we know what assignments (or patterns of assignments) in the global organization have demonstrated the most impact? And, can we articulate what is particularly developmental about a specific role or assignment?
Closely related to this question, do we have alignment around specific goals relating to talent development, e.g., beyond a success model, can we articulate specific metrics relating to bench strength objectives (e.g., number of leaders rated high potential; diversity measures; the mix of high potentials relative to seasoned pros; net talent export objectives; etc.)? Importantly, can we tie these to the organization’s reward systems?
Fundamentally, have we decided to manage talent as a strategic corporate asset, and how do we reconcile that with the autonomy and more entrepreneurial aspects of our organization that have worked in the past? Do we have a human capital development strategy, i.e., an explicit game plan or a model “theory of the
case” (e.g., one that aligns external recruiting, assignment management, talent review discussions, special programs, etc.) – and all of which are aligned explicitly with strategic business goals?
There is a significant literature which supports the belief that most executives do not know how to di erential performance from true leadership and advancement potential. How do we address this problem with real impact, and closely related, how do we develop “scrubbed” data about talent that has real validity? Are there supplemental tools that have demonstrated their utility for measuring learning agility – the best predictor of advancement potential?
At the end of the day, an e ective talent development program drives action vs. bureaucratic processes: But how do we build consistency, and high quality data, and not build bureaucracy (or what could be at least perceived as bureaucracy)?
Are we prepared to measure the engagement levels (and trends therein), within our key talent cohorts – a key element in establishing our brand as a talent developer?
A voluminous literature attests to the reluctance, if not inability, of executives to become engaged and supportive of a disciplined performance management process: If forms and information capture are not a su cient answer, what processes or practices have helped organizations move toward greater consistency in evaluating talent – and, along the way, helped build their brand as talent developers?
Listed below are some specific “first blush” recommendations based upon our current level of understanding. We expect to refine and edit these – consider them initial brainstorming hypotheses at this point, hopefully useful to stimulate more focused and detailed discussions.
- Keep the process simple – roll out and really merchandize a Bossidy-like approach to basic performance management, one that insists everyone gets a professionally executed review (with each division free to dictate what it values or chooses to emphasize as important to it’s unique business) – but a simple one page summary should su ce, and should not require complex rating schemes or competencies.
- Since compensation and the processes for determining who gets what is so important and so deeply imbedded in the culture – consider making that process the performance management system (i.e., it should be aligned and ideally one and the same). This obviously will require a separate process for talent development assessment and planning. We understand that this presumably represents too big a step – but it seems an obvious longer term necessity.
- Ultimately, we know of no best practice organization that does not move toward greater transparency in its talent management practices. However, most resolve the transparency issue by building two distinct systems – one for collecting and scrubbing data about talent (i.e., high integrity information); and a second for providing people constructive feedback.
- A need exists to design an engaging training program to help teach executives to assess potential. This actually can be a very stimulating exercise if done correctly. It is our impression that many organizations basically just adopt some form to the famous 9 X 9 grid – not a bad start at defining or di erentiating performance and potential: The real trick, however, is to teach it, and perhaps do that in a way that it also accomplishes an e ective rack and stack output re the leadership cadre within the firm.
- All organizations that develop strong reputations as talent developers institute some form of a structured talent review process. This requires a significant amount of time on the part of HR to execute (i.e., HR does the heavy administrative work), but the actual process itself has a degree of urgency and stress associated with it, mostly as a function of the hard questions that senior executives who are driving the process ask! And the active involvement of key leaders is essential (properly coached by talent management professionals). What themes get stressed in these reviews needs to be carefully tailored (e.g., should we focus on challenging basic calls on people, focus on diversity goals, the dearth of leadership talent and steps to address that issue, etc.) – but keep it simple and focused on a short list.
- It feels culturally aligned to not fight a certain performance oriented bias in whatever processes get rolled out – i.e., who is delivering the most value now? However, in the talent review discussions, an e ort should be made to break out the subject of leadership talent and learning agility as a separate and di erent or independent exercise – perhaps a subset of the former discussion.
- It is a mistake to involve the Executive Committee in tedious discussions of individual profiles (note that does not mean individuals should not be discussed in advance as part of the process of building profile data). However, they do need to review and comment on summary data displays – ones that invite stimulating debate. For example, a summary grid can be displayed and questions asked:
Are the calls about performance and potential correct?
Hammer out the priority actions for the cohort being reviewed (i.e., Formulate a Must Move, Could Move, Who is at Risk groupings?)
Debate and define realistic but very measurable, deliverable goals for the talent review process in the forthcoming cycle (e.g., diversity goals; number of people with high leadership potential ratings and a % of the total, etc.).
Share learning’s and success stories from each operating unit, and have each unit define what they consider their talent development needs – with active challenge and debate from their peers: Create an edge to this by asking who is doing the best job of developing talent and why! (Note: It is quite appropriate for each division to have their own goals, but that some overarching corporate goals also need to be established and agreed to by all, e.g., leadership talent, diversity, etc.).
Engage in interesting game planning or what if discussions (e.g., use magnetic charts and “eliminate” key players and ask what would we do if that occurred, or if we started a new business or acquired one with weak leadership in place?)
Whatever the process, experience teaches that e ective prework is essential to ensuring a productive meeting occurs – one that helps build alignment and clear follow-on action steps. Again, nothing works better than connecting these discussions to line of sight business goals.
- It may be prudent and very cost e ective to increase the numbers of people who are invited to attend special development programs or experiences – we suspect it is dysfunctional at the end of the day to limit these to only the top 10% for example. This doesn’t mean that a truly short list of the most talented get slighted or not invited to very special forms of recognition and support.
- There is nothing wrong with the phenomenon of so-called “divine intervention” to help build awareness of personal potential – in fact, it is inevitable. However, executives vary tremendously in their ability to assess and develop talent. Consider expanding the organizations' ongoing mentoring programs, but make it a big deal to be selected as a mentor (i.e., give recognition and rewards to those who do it well, and leverage their skills). The selective use of executive coaching should be considered for strategic recognition, accelerating self awareness, and not remedial interventions.
- Most importantly, work with each division to develop consensus about which positions are best leveraged for development purposes, not forgetting to be as explicit as possible about what specifically is developmental about that position, and build support for greater oversight and review about who gets assigned to those positions. This same mind set should be applied to special projects and thinking creatively about other development opportunities. We envision this as a dynamic and ongoing process – not a once a year event.
- From a workflow and process sequencing point of view, recognize it makes most sense to build a talent review process that is closely aligned with the way the organization operates today. Ideally the process should have the weight and attention equivalent to that associated with business planning, financial and strategic reviews. But specifically from a talent development perspective, ensure that appraisal and compensation decisions are made independently of longer term potential and talent development discussions. Also recognize that the line HR function typically bears the brunt of administrative support work associated with preparing for talent review discussions, and facilitating talent review meetings. If HR, for whatever reason, is not at the table – an appropriate substitute must be found.
- Consider building a specific and independent process for communicating with (and monitoring) talent about talent development plans – this should ideally have the active support of key line managers, and those selected for key mentoring roles – but it is essentially a mechanism to make up for what are typical shortfalls in how the line organization handles this function. This is likely to be a specific initiative of the talent development function and is most definitely the opposite of the transactional side of traditional HR.