Talent Management Why Best Fit Beats Best Practice

Director at AM Azure Consulting à AM Azure Consulting
8 Feb 2013

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Talent Management Why Best Fit Beats Best Practice

  1. Why best practice in talent management is failing Talent management as widely practiced is in danger of becoming part of the How to apply “best fit” problem rather than the solution to sustained organisational success. Best solutions for your business practice as a standardised prescription is now holding back the diversity of innovative processes that different firms can draw on to face their distinctive business challenges.
  2. Why we should be nervous about firms that win best practice talent management awards In the early 2000s, the UK Bank was a global player, fifth largest in This response triggered an angry debate on the blogosphere with the world by market capitalisation. And it was winning awards left, the question: “If the HR Director had no influence over these bad right and centre. Its HR Director regularly appeared in the Power decisions, what was the point of the HR Director?” Player listings of HR rankings. According to 2008’s HR’s Most Influential, the HR Director’s “ability to align HR with the business Paul Kearns argues that the Bank’s “strategic ambition to become strategy is almost unrivalled.” the ‘most admired bank’ was not matched by an ability to get the best value from its human capital. If that isn’t the job of an HR The Human Resources function won prizes for its effectiveness in Director then I don’t know what is.” Kearns points out that the human capital and talent management. Hay Group interviewed Bank’s problems were “caused by its culture; the attitudes and “senior executives from 150 global organisations to identify the behaviours that prevailed at the time. Behaviours influenced by the secrets of effective business performance.” It highlighted the Bank HR policies and practices in an organisation.” as having “the right approach to talent management and is reaping the business benefits.” Neil Morrison at FlipchartFairytales suggests that “it is an exaggeration to say that the HR department can be blamed for the In 2009 the Bank reported the biggest loss in UK corporate history. Bank’s collapse…an HR Director who did not want to implement an About to go bust, it had to be bailed out by the UK tax payer to the HR strategy that facilitated casino banking would have been out of tune of £45 billion. a job.” In the post mortem that followed this business fiasco, and the This is right. But we cannot have it both ways. It seems odd to regulatory review of the bank’s corporate governance, risk receive awards and prizes for strategically well aligned talent management and executive team, the question emerged: what was management and then, in the wake of a business melt-down, to say the role of talent management? As Professor Graeme Martin asks: “nowt to do with us gov”¹ and describe the activity as not much “was Human Resources the unindicted co-conspirator in the demise more than a support function. of financial services?” What exactly is going on in the world of best practice talent In recent interviews the then HR Director has argued that the finger management? of blame cannot be pointed at Human Resources. “I cannot see what HR could have done…HR is a support function.” 1. rbs-hr-director/ © AM Azure Consulting Ltd 2012 2
  3. In a nut shell An unthinking focus on best practice can  the world of talent management has been seduced by the best practices of the business success industry, when recent undermine the strategic positioning of a analysis of the “great firms” highlights fundamental company. Best practice is about standardisation. misgivings about the findings It doesn’t provide any basis for competitive advantage.  the attempt to map out a standard formula of best practice in talent management has been based on a flawed programme Paul Hunter of research, more often driven by the product applications and consultancy services of talent management vendors than from any meaningful evidence base  talent management in search of “best practice” will continue to struggle to make a business impact. At best it will be an organisational irrelevance, and, at worst, damaging to organisational competitiveness  talent management as “best fit” arises from the wise choice of a game plan that reflects the context of strategic capability, organisational design, corporate culture and the dynamics of talent supply and demand  the best practice of the neat jigsaw puzzle of “strategic alignment” only exists in consultancy conference presentations. The reality is a messy game of talent management Snakes and Ladders. But it is an approach that is more likely to improve organisational effectiveness © AM Azure Consulting Ltd 2012 3
  4. The story line for talent management The script from the talent management industry is now a familiar This article argues instead that: one.  we may have been looking in the wrong places for best The talent management challenge we are told is increasing. practice Despite the economic down turn of the last few years, organisations still face a “perfect storm” of shortages for specific  there is no best practice; there is only best fit based on the skills, demographic changes, and the challenges of globalisation. distinctives of our organisation's past, present and future Research reminds us that we continue to struggle with talent  the continued attempt to implement the standard recipe of best management. For a variety of reasons, organisations still find it practice, far from improving business competitiveness, will be difficult to design and implement the responses to meet this irrelevant, or in some instances, damaging to our challenge. organisations But we do “know” that talent management practice is  we need to adopt a different mind set to talent management, associated with superior levels of corporate performance. one that identifies the distinctive challenges facing our organisation to formulate a targeted talent management game If we are to face the talent management challenge we need to plan identify the best practices associated with these high performing organisations, and implement them within our firms to maintain our competitiveness. © AM Azure Consulting Ltd 2012 4
  5. The menu of talent management best practice Talent management includes a spectrum of Star spotting to find the bright and beautiful activities, underpinned by different Since we know that: “most performance outcomes are attributable to a small group of elite performers”, we should focus our talent management efforts on this group. Here we recruit and incentivise the most assumptions and mind sets about the link experienced and capable people in the market place, the leaders with the “right stuff” who can take on between individual and organisational “mission impossible” for our strategic future. performance. Focus on the strategically critical roles However it is fair to say that most best- This is the identification of, not the A players, but the A positions, those roles that represent the key battle ground of competitive success. And to do whatever it takes to get the superior performers in these practice prescriptions have focused on the roles. This is a highly targeted talent management strategy to place bets on a few key roles and where individual, their performance and potential, excellent performance will make most business impact. as key to business success. Build a pool or wave of talent This is the talent management strategy that sets out to build a breadth and depth of capability from within. Here the aim is to provide the next generation of leadership able to reinforce our values and culture to maintain continuity. This enterprise is less about classic replacement charting, and more about creating groupings of individuals able to progress to different clusterings of organisational activity. Engage the many This is talent management as the recognition that organisational success is about the mobilisation of coordinated effort at all levels and across many different functions. Here the enterprise is less about directing resources to the corporate elite and fast track high potentials, and more about building a culture and working environment that is vibrant and fosters talent in collaboration for greater productivity and innovation. Coordinate talent on a project basis Talent management is a This is the “Hollywood model” of talent management in which we coordinate the optimal mix of skill sets and expertise around big projects. Here we draw on a series of networks to bring together individuals craft, not a science. It is and teams with the specific experience and talents relevant to the scale and type of the project. We are less concerned with “owning” talent and more focused on how to orchestrate the performance of very context-dependent, and individuals and work groups across a range of collaborative structures. so is the decision when to Outsource talent favour one approach over This is the lean version of talent management in which an organisation assesses the best way to configure its different activities - strategic, operational and support - and structures itself around a small another. corporate hub, accessing talent on an “as and when” basis, through an array of partnerships and outsourcing arrangements. Paul Sparrow © AM Azure Consulting Ltd 2012 5
  6. Is the sky about to fall on our talent management heads? If the research clamour of the talent management industry is to be believed, the growing gap between current practice and the challenge facing organisations indicates that the business sky is about to crash down on our talent management heads. HI Faced with such a threat, the argument runs, we need to look to The sky is Competing for the principles and practices of those firms who have navigated falling on the future Talent Management Challenge successfully the talent management challenge, identify the our heads around a wise lessons and apply them to our firms. strategy and The typical solution is any permutation of: smart tactics  a rethink of the employee brand for the attraction and retention of the talent we need  an exercise in employee engagement to improve motivation  a competency framework to profile skill requirements  better assessment methodology for selection  development centres to spot the high potentials at an earlier stage in their career  programmes of business education supported by executive coaching to accelerate professional and leadership development Life Outrunning the  improved talent technology for data management and goes needs of the organisational intelligence on business  better definitions of potential to support nine box plotting LO within talent reviews Talent Management Practice  and more © AM Azure Consulting Ltd 2012 6
  7. A question mark about best practice The talent management industry preaches the solution of best principles and practice. Of course there is an acknowledgement I believe too much that “each organisation is different”. But this important reality is dismissed quickly to list out the prescribed approach, one that is management wisdom is not remarkably similar across very different organisations. wise at all, but instead flawed Best principles - along the lines of build commitment from the knowledge based on a CEO and senior management, or clarify accountabilities for line misunderstanding or management ownership - often represent little more than vague platitudes. misapplication of “best practices” that often And best practices seem based on a logic of: “this is what successful companies do. These things must make them constitutes poor, incomplete or successful. Therefore we must apply their specific talent outright obsolete thinking. management activities if we want to be and stay successful.” Mike Myatt The problem is that the best practices of the successful firms may be anything but. They may be very common, but they may have little to do with successful performance. To understand the issues it is useful to look at the experiences and impact of the business success industry, that grouping of publications and consultants who claim to have discovered the formula for sustained organisational performance. © AM Azure Consulting Ltd 2012 7
  8. The challenge of organisational survival and success The odds are against the long term survival and success of our organisation. In “Profit from the Core” only 13% of 1854 companies were able to grow consistently over a 10 year period. In the “Creative Destruction” analysis a mere 160 of 1,008 companies survived from 1962 to 1998. And Jim Collins in “Good to Great” examined 1,435 companies over 30 years; only 9% had managed to out-perform the market over a 10 year period. Faced with these odds, we are in a tough competitive game. And we look for ways to increase the likelihood of staying in the game; even better, to find ways of improving the chances of winning the game. The solution: to learn from the practices of successful firms. The research model is now well established:  start with a group of companies  look at the most successful  examine what they do to identify the patterns associated with their success  translate these patterns into a general framework with the promise that this formula will help us achieve the results of the successful firms © AM Azure Consulting Ltd 2012 8
  9. The failure of the success business At best, the success industry integrates robust research with 1. The success problem business case studies to stimulate debate about promising What in fact seemed to have been remarkable, exceptional and practices that will help our organisations improve. This is learning great companies turn out in fact to be in the main a sample of lucky from success to access new insights and experiences to help us false positives. Identifying patterns from the largely lucky is no rethink what we do and how we might do things better. guide to highlighting the dynamics of sustained success. However, over the last few years, a number of management scientists, economists and statisticians have begun to explore the 2. The cause - effect problem claim that the business success industry has discovered “the We have relied on a research methodology in which the immutable laws of organised human performance”, or in Jim consequences of success have shaped our attributions of the Collins’ words to have uncovered “timeless fundamentals that causes of success. The success industry hasn’t so much identified enable organizations to endure and thrive” the causal factors of success, as been impressed by “just so” stories that were used to explain the consequences of success. and identified three fundamental problems: 3. The prediction problem This is the bottom line for the success industry. Did our understanding of currently successful firms help improve our effectiveness in predicting who would succeed in future? The answer is no. Drawing on samples of the largely lucky who provided spurious explanations of their success, the track record of the success industry in predicting future success has been dismal. © AM Azure Consulting Ltd 2012 9
  10. Problem 1: we haven’t looked at genuinely successful companies Rebecca Henderson at Harvard Business School asks all the Raynor tested if the “success studies” had been studying students in the class room to stand up. unambiguously successful firms . Here he looked at the companies profiled by eleven credible or popular success studies. Only 30 out “I then ask each of them to toss a coin: if the toss comes up “tails” of 228 different firms held out as exemplars of successful they are to sit down, but if it comes up “heads” they are to remain companies are in fact genuinely remarkable firms. standing. Since there are around 70 students in the class, after six or seven rounds there is only one student left standing. We have been looking in the wrong places for our understanding of the dynamics of organisational success. With the appropriate theatrics, I approach the student and ask: “How did you do that? Seven heads in a row! Can I interview you in Fortune?” The key point is that in any system there will be variation, some of this variation arising from luck, and other from skill. One student out of 70 hitting a one off run of seven heads is luck. The student who keeps tossing seven heads, time after time, possesses an important skill, and we need to understand the reasons. The argument here isn’t that the companies included in the success literature were lucky. But until we sort out the role of luck, we don’t know if we’re looking at genuinely successful companies or merely lucky ones. Drawing on a sample of over 22,000 companies between 1966 and 2008, Michael Raynor in his ambitious Persistence Project has attempted exactly that: to separate out the lucky false positives from the genuinely remarkable high performing firms. © AM Azure Consulting Ltd 2012 10
  11. Problem 2: we get cause and consequence confused Phil Rosenzewig argues that the data used by the success industry rather than being an explanation of the organisations’ We base our judgments uniquely on success are in fact a consequence of the organisations’ success. financial results. If a company is making good profits the press will talk In “The Halo Effect”, Rosenzweig points to an array of psychological studies that indicate if you arbitrarily tell a person of a powerful, dynamic CEO and a they have excelled or failed at some task, those told they have strong corporate culture. If the same succeeded generate different explanations of the outcome than company is doing badly, the same those told they had failed. This is the “halo effect” in which our overall evaluations of success or failure influence the way we CEO will be described as arrogant think about the reasons for that success or failure. and out of touch. The firm’s corporate Knowing that a company is currently highly successful we are culture will be described as poor. more likely to report any manner of positive attributes about the Phil Rosenzweig organisation (its employee engagement, its leadership, its systems, talent management practices, etc). Conversely if an organisation is struggling, rather than discerning the specifics of what is or isn’t working, we generalise to identify the negatives. This problem Rosenzweig argues, is reinforced by the questions used by the success industry. “One of Jim Collins' interview questions, for example, asks managers: "Can you think of one particularly powerful example that exemplifies the essence of the shift from good to great at your company?” Faced with this kind of leading question, which currently The success industry has been examining the stories successful firm is going to respond with anything other than organisations tell themselves to explain their current success positive examples? rather than pinpoint the real causes of their performance. © AM Azure Consulting Ltd 2012 11
  12. Problem 3: a poor track record of prediction The overwhelming message of the success industry has been: The track record of the “successful” companies Great companies do these things. If you do these things, Of the 43 companies studied in “In Search for Excellence”, less you too will be great. than one third could be described as excellent and nearly one half had serious performance declines, within only five years of their If the success industry is on to something to unlock the dynamics original “excellence. of organisational performance, then the least we should expect is that the “great firms” (or least a meaningful proportion of them) For the firms profiled in “Built to Last, only 5 companies had themselves will continue to display signs of greatness. improved profitability, and 11 had declined within five years of the original research. We shouldn’t anticipate that every firm profiled in the success genre is a dead cert for future success given the changing and Bruce Niendorf and Kristine Stock analysed the 11 companies of competitive nature of the business game. But we should expect a “Good to Great”. Only 1 had out-performed the stock market, and reasonable level of predictive power if the success research has the overall portfolio of companies had under-performed the market. identified “timeless, universal answers that can be applied by an 1 had gone bust, another needed a massive government bail out. organisation”. In Collins’ 2010 analysis of another set of 7 “remarkable” firms in “Great By Choice”, less than three years later it is unclear that the “great” are in fact all that great compared to the comparator organisations Collins selected. After all it has been Apple that has out-performed the “great by choice” Microsoft. Applying Nassim Taleb’s “skin in the game” test, an investor placing their bets on the success firms would have done worse than if they had followed a standard tracker fund¹. . 1. Taleb, being a contrarian thinker, would no doubt short the stock of any organisation profiled in the success literature. © AM Azure Consulting Ltd 2012 12
  13. Has the business success industry failed? Given the earnest humourlessness of much of the success 1. clarity of vision. This avoids the distractions of exciting industry, the irony of this enterprise has largely gone unnoticed. In diversification that can derail long-term success. But embarking on a business to identify the dynamics of success it neither is it an obsession with the “one thing”. It seems to failed as a business. Jim Collins cites Burlanmanson’s Law: be an overarching purpose that maintains a “compelling vision that is shared widely across levels and functions” “The greatest danger is not failure, but being successful that helps organisations strategically reposition without realising why.” themselves. A wise insight. Another danger is assuming that we are looking at 2. disciplined resource allocation. This is partly a robust success in the first place. assessment of the merits of each new opportunity. It is also a rigour to “compartmentalise resources” to invest in both Is the success game then pretty much over? Not quite. today and tomorrow’s business. There are bright spots. The “Persistence Project” of Michael 3. excellence in execution across all functions. This is a Raynor - a much more systematic and comprehensive analysis - relentless attention to the detailed disciplines of identifies key patterns. Accessing a larger data set over a longer implementation. time frame, with tougher criteria to minimise the low positives of the lucky successful, Raynor evaluates the “Triple Crown Raynor goes on to make the point that the evidence base suggests Winners”, those firms that delivered superior growth, league- that sustained and remarkable organisational performance has to leading profitability and shareholder returns at the same time. His jump all three hurdles. summary of the factors: “strengths in any one area do not compensate for weaknesses in others.” Of course these are storylines in the narrative of success. Raynor reminds us that the “the dynamic nature of the challenges and opportunities faced by different companies at different times makes it challenging to have a formula-based approach to growth.” These . are guiding principles rather than the prescription of the specific “do this-get that” practices typically sold by the success industry. © AM Azure Consulting Ltd 2012 13
  14. What about the implications for best practice in talent management? The talent management industry, that constellation of business schools and management colleges, and consultancies, from the Alignment and integration are the established big firms to the smaller niche players, has mirrored keys to the success and effectiveness of the experiences of the business success industry. global talent management and are The approach works in the same way: proven to correlate strongly with  identify successful firms superior business performance, both financial and non-financial.  look at their talent management practices Managing Today’s Global Workforce, Ernst &  summarise the findings into a framework and new Young 2010 theory  sell this bundle of best practices as the solution to improved organisational performance © AM Azure Consulting Ltd 2012 14
  15. What’s going wrong in the “best practice talent management industry”? A typical research programme looks like this¹: Grab a group of 300 firms in 2002. Make an evaluation of the maturity and innovativeness of their talent management practices. (Here it’s never made explicit what criteria were applied to determine how mature and innovative these practices are.) Access measures of the organisations’ current financial performance, typically total returns to shareholders, or return on assets. Then run the numbers to look at the correlation between talent management practice and corporate performance. Then generate a nice chart. Or for those who don’t get the pattern, summarise in a few handy percentages or headline quotes, along the lines of: “high performing firms are four times more likely to demonstrate best practice in talent management than low performing firms.” But the issue is not the correlation between today’s financial performance and current talent management practice. The issue is the extent to which best practice in talent management predicts future organisational outcomes. Here we need to look at firms who applied best practice talent management in, say, 2002 to identify if they were more productive, profitable and competitive in the market place in 2012 than their less proactive contemporaries. 1. Our desk top review examined the most frequently cited research programmes, including those from the Aberdeen Group, Accenture, Bersin Associates, Booz & Co, Ernst & Young, Hackett Group, Hay Group, Hewitt Associates, IBM Institute for Business Value/Human Capital Institute, Jeitosa, McBassi & Co, McKinsey, and Right Management. © AM Azure Consulting Ltd 2012 15
  16. How to set up a new talent management consultancy: sell the “deli” theory We know the problems of the business success industry:  inadequate sampling that mistakes the lucky positives from the genuinely remarkable  the halo effect in which the consequences of current success become post hoc explanatory narratives  the dismal failure to predict future success, even over a relatively short time scale The “best practice in talent management” enterprise has largely been a rerun of this exercise. This is likely to lead to the “deli theory” of organisational success. We conduct painstaking and methodical research to find that high performing firms are eight times more likely than low performing firms to have introduced a high quality deli into their company restaurants. Quickly we make the link between the presence of a deli, employee engagement and corporate performance. We announce this research finding to the talent management community and organise conferences and workshops to share examples of how firms have implemented “deli” best practice. We then set up a talent management consultancy based on advisory services in the introduction of a deli, with the promise that this will transform your business. This, like the business success industry, is based on faulty reasoning. The presence of a deli may be as much a consequence of success for current high performing firms than a cause of their future performance. © AM Azure Consulting Ltd 2012 16
  17. An example of best practice talent management smoke and mirrors Over ten years ago, The War For Talent provided a new road At first sight, this talent management prescription looked like map for the emerging talent management profession. Applying reasonable advice. And it was a solution that was implemented the methodology of the success business, the McKinsey research energetically by talent management practitioners. “It’s hard to team identified the talent management activities of high argue with the idea that the company with the best talent wins.” performing firms to locate the specific practices that underpinned their success. “Companies scoring in the top quintile of talent- Bruce Tulgan in Winning Talent Wars declares: “talent is the management practices outperform their industry's mean return to show. Organisations need to learn how to employ people shareholders by a remarkable 22 percentage points.” whenever, wherever, and however they are willing. Instead of staffing the jobs, staff the work.” And a package of recommendations were outlined to apply the talent management excellence of the successful firms: It’s now over 10 years since McKinsey conducted their research. It’s worth asking how these firms displaying talent management  develop a talent mind set: build an obsession with people excellence are performing now. to drive business performance  create an employee value proposition: review current In our analysis of the 27 exemplar companies profiled in the 2001 employment practices to create an environment in which The War for Talent research we adopted a pragmatic approach, talent can flourish using Fortune 500 rankings in 2012 (due to changes in ownership,  rebuild your recruitment strategy: be proactive in the etc. it was difficult to locate performance data for the full data set). search for talent at every level  accelerate the development of talent: look for imaginative Around half of the grouping is now down on 2000 status, another way to test and stretch emerging talent quarter are about the same, and a quarter is up.  differentiate and affirm your people: encourage honesty in rewarding superior performance and tackling This is hardly a positive endorsement of best practice talent performance problems management as shaping future organisational success. © AM Azure Consulting Ltd 2012 17
  18. Things get worse The more immediate problem for The War For Talent was the Developing a talent mind set, the sensible belief that people spectacular downfall of Enron, the exemplar of its talent make a difference became an obsession that individual management formula. Not only had Enron implemented the contribution is the driver of business success. For Enron, principles of best practice talent management, it had made them whatever the “smartest guys in the room” touched would turn to fundamental to the way it ran the business. business gold. Malcolm Gladwell asks: “what if Enron failed not in spite of its Creating an employee value proposition should be the review talent mind-set, but because of it?” of current employment practices to build an environment in which talent can flourish. For Enron it created a “them and us” culture Jeffrey Pfeffer¹ identifies the problems of “The War For Talent”: in which the “super stars” flourished and others were ignored.  an emphasis on individual performance to reward the stars diminishes teamwork, “creating destructive internal competition, and retarding learning” Rebuilding the recruitment strategy is proactivity in the search  the glorification of the talents of those outside the company for talent at every level. For Enron it was a resourcing plan to buy which dismisses the skills and abilities of insiders in the “best, bright and beautiful” at inflated salaries that  “a self-fulfilling prophecy where those labelled as less able undermined continuity of culture and purpose. become less able because they are asked to do less, given fewer resources, training, and mentoring” Accelerating the development of talent is finding imaginative  a focus on personal brilliance that pays less attention to the ways to test and stretch emerging talent. In Enron it resulted in context of the systemic, cultural, and business processes that the over-promotion of inexperienced individuals who got out in fact are critical to collective performance of their depth and simply weren’t up to the challenge.  an elitist, arrogant attitude that lacks the humility to learn and get better Differentiate and affirm your people could have led to greater honesty in rewarding superior performance and tackling performance problems. Instead for Enron it created a “rank-and- yank” performance management strategy played out in talent reviews that became known as the “pit of vipers”, fuelling suspicion, self-seeking behaviour, a breakdown of trust and ultimately corruption. 1. © AM Azure Consulting Ltd 2012 18
  19. Rethinking best practice The McKinsey “The War For Talent “study was fundamentally To move from best practice to best fit, we suggest the following: flawed, despite the enthusiasm with which the talent management industry adopted its findings and prescription to achieve superior  stopping the stupid stuff before we pursue excellence levels of organisational performance. And its core methodology continues to be repeated throughout the talent management  starting with 3 guiding principles industry.  addressing the trade offs of 4 key fundamentals At best, the package of best practice has been irrelevant in the prediction of business success. At worst it has been a deeply  monitoring the radar screen of promising practice damaging experience for specific firms, particularly those who adopted that aggressive best practice of “rank and yank”.  an executive debate about the past, present and future This is not to argue that talent management can’t be a critical  establishing an actionable game plan component of an organisation’s business performance. It is clear that it can be¹. Neither are we suggesting that particular talent management practices are wrong. There is no shortage of specific processes that have had a significant business impact, although the evidence base is stronger for some than others. But it is to suggest that a reliance on the standard bundle of “do- this-get-that” is a flawed talent management strategy. 1. Does Human Capital Matter? A Meta-Analysis of the Relationship Between Human Capital and Firm Performance, Crook, et al, Journal of Applied Psychology, 2011 © AM Azure Consulting Ltd 2012 19
  20. We stop the stupid stuff before we pursue excellence In his analysis of the successes and failures of the hi tech industry Although there might not be a standard package of best practices, over a 25 year period, Rick Chapman went off “In Search of there may be a set of “worst practices”, i.e. activities with little Stupidity” as an alternative to Tom Peters’ “In Search of Excellence”. evidence of their effectiveness, or worse, the clear indication of a If there is any rhyme or reason to the dynamics that differentiate potential to make things worse. There are the talent management winners from losers it is this: antics that Dave Ulrich describes as organisational “frou frou”; well marketed wheezes that have gained corporate traction, and are “the avoidance of stupid mistakes.” either irrelevant or damaging to our organisations’ competitive health. Most of the business disasters could have been avoided with a “modicum of common sense and situational awareness.” This isn’t This is that variation of maneouvres that includes: just the wisdom of 20/20 hindsight, Chapman’s in-depth review reveals the details of stunningly bad decisions made by some very  the utilisation of a “one-size-fits-all” test for assessment “smart people”.  black box systems for person-job matching that claim 85% predictive accuracy (it never quite means what we think it does)  pseudo scientific programmes for personal development with claims of “revolutionary life transformation”  new age style team development processes that are personally intrusive and demeaning to participants  secret sessions for talent reviews that “talk plots” but result in no action  the purchase of a fully integrated talent technology solution (which will be out of date after a two year programme of implementation) The race goes not to the  reward systems that incentivise short-term financial performance strong, nor swift, nor with no downside for the consequences of incompetence more intelligent but to the less stupid. Forecasting organisational success is difficult. Predicting corporate failure and decline is much easier if we have introduced and Rick Chapman implemented the “stupid stuff” of the obsessional “one thing” talent management gurus. © AM Azure Consulting Ltd 2012 20
  21. We start with 3 guiding principles A good starting point is to apply the three guiding principles Michael Clarity of vision. This is the informed and coherent insight into the Raynor identified in his analysis of those firms that sustained precise role of talent management within our organisation’s model genuinely high performance over time. of business success and how it plans to compete for the future. This is to see the big picture of the talent management options and analyse the pros and cons of different resourcing and development strategies. For some organisations this may be a relatively modest enterprise to focus on improvements in a handful of current processes. For others it may a fundamental overhaul of the organisation's structure, policies and systems. Disciplined resource allocation. This is the scrutiny of organisational activity to assess what is helping and hindering overall efforts . This highlights what is currently in place and working well, what is in place but needs to stop, and what needs to be introduced. It is also the tough exercise in prioritisation to agree where resources need to be directed and deployed for maximum advantage. Should we, for example, target our efforts on a few key individuals in critical roles, or is talent management a much wider enterprise for our business? Excellence in execution. This is the relentless attention to the detail of implementation, and the delivery of practical user friendly tools for individuals and managers to utilise. If, for example, talent reviews are an important component within the talent management game plan, this is the “nuts and bolts” of systems for the positioning, preparation, facilitation and follow up of crystal clear processes within defined accountabilities. © AM Azure Consulting Ltd 2012 21
  22. We address the trade offs of 4 key fundamentals Guiding principles are useful, but only take us so far in mapping out 4 FUNDAMENTALS a talent management game plan that is right for our organisation. Here we now move into a messier world than the standard Strategic Capability: the battle grounds on which we will prescription of best practice talent management suggests. compete as an organisation in future. These are the capabilities in which we need to excel to out-perform the competition, and a To develop a specific “best fit” map and a pragmatic action plan for clear view of how similar or different they will be to current our organisation we need to address the issues of: capability.  strategic capability Organisational design: this is the ingenuity with which we coordinate activity to optimise our effectiveness, and the decisions  organisational design we make to trade off the pros and cons of centralisation vs. decentralisation or the integration of business activity vs.  corporate culture differentiation This is partly about establishing a structural blue print to map the roles and relationships that will guide the  the talent market place implementation of our strategy. It is also about how we access and leverage talent from a series of partner firms. Corporate culture: this is identifying the “personality” of the organisation, its operating ethos and working ethos which sets the tone for how we do things. Here talent management becomes a debate about how attractive or not we are to the kinds of people we want to recruit, develop, progress and retain. This is also a The choice of talent willingness to recognise when our culture is part of the talent management problem. management strategy massively affects The talent market place: this is an insight into the dynamics of supply and demand in the market place in which we operate, organisational alongside a robust debate about our structure and culture, and the performance. experience and skills we would like vis-a-vis those we are willing and able to either buy in from outside or develop from within. Pamela Bethke-Langenegger © AM Azure Consulting Ltd 2012 22
  23. 4 fundamentals for best fit Strategic capability: Organisational design: what are the business battle-grounds on which we how should we coordinate our activities around the will compete? This is an assessment of the strategic capabilities we need? Which choices need to be space that maintains most distance from our made about our organisational structure? What is competitors but keeps us close to our target fundamental to our organisation and what is customers. For some organisations, this is very peripheral and can be outsourced? What is the focused, for example, technical innovation within a relationship between the corporate core and its niche but profitable market. For others success will different business activities, and with other be gained or lost by the robustness of business stakeholder partners? How inter-dependent are the processes for cost differentiation. Strategic Organisational different business units; largely stand alone activities Capability Design or highly inter-connected? BEST FIT The Talent Corporate Market Place Culture The talent market place: Corporate culture: what are dynamics of supply and demand in the what is the legacy of our organisational past and the markets and geographies in which we operate? philosophy within which it has operated? Which Where and how can we access the expertise and values have shaped the way we interact and behave? skill sets we need? How much are we prepared to Is this a culture that will evolve easily to meet the pay for these? What is the optimal balance of buy in demands of the future? Or do we need to rethink the or develop from within? ethos of our culture to shift to a different working style? © AM Azure Consulting Ltd 2012 23
  24. 4 fundamentals for best fit and 6 big questions This is talent management, not as the import of the tactics of best Is strategy structure, or is structure strategy? Is our organisational structure well aligned within clear strategic priorities vs. practice, but as a strategic debate to address the fundamental do we have sufficient flexibility with the current structure to encourage new dilemmas of organisational success. Here we ask the tough thinking about the future? questions about the options we face in deciding the scope and focus of how we will compete in future, how we should organise ourselves Is our culture a strength, or a weakness in talent management? given the choices of structural design, and the kind of culture that will Does our culture provide a distinctive working environment to differentiate be key to our business - all against the backdrop of the realities of us from our competitors vs. do we need to rethink our talent requirement to supply and demand in the talent market place. bring in those individuals who will catalyse a fundamental change in how we operate? Are we clear about the strategic bus, or looking for the right people to get on the bus? Can we achieve our business aspirations deploying the talent we can access - internally and externally vs. do we need to raise our strategic game through a rethink of our talent requirement? Does our structure drive our culture, or is culture the dynamic of future success? Does our organisational structure reinforce the kind of culture we want to build vs. is our culture so strong that we can be much looser and more flexible in how we organise and coordinate work activity? Does strategy shape the working environment, or does culture eat strategy’s lunch? Does our operating environment support the implementation of our strategic goals and priorities vs. is our culture sufficiently responsive and flexible to generate the ideas that will help rethink our business options? Do we configure talent around structure or allow talent to define structure? Does our template of organisational design of roles and reporting relationships make it easy to access the talent we need for the future vs. do we need to shift to a different organisational design to attract and retain the For those interested in this approach, email kinds of individuals the business requires? for an extensive check-list © AM Azure Consulting Ltd 2012 24
  25. When we get the trade offs wrong: an example of wrong headed thinking Trade-offs are difficult. Because there is no obvious solution, they Culture of course is a key dynamic of future organisational require us to weigh up the pros and cons of our options given our success. available resources, and the need to make decisions before our competitors might out-smart us. But if we put our eggs only in this basket, without a recognition of the difficult dilemmas to address in thinking about strategy, It takes several rounds of hard thinking and debate to get to the point structure and the talent market place, we shouldn’t be too where we are clear about the best way to balance the strategic ideal surprised if our organisation falls by the way side. with informed choices about our organisational design, and the kind of culture we want to build. Only then can we finalise our talent management game plan. For some there are short cuts. For Tom Peters, the formula is simple: “excellent companies create corporate cultures in which success flourishes.” This is an overwhelming game plan of culture out-trumps strategy. Get the culture right and strategy will look after itself. Rick Chapman summarises the position of one firm, Lanier, that Peters extolled as excellent, an organisation that “lives, sleeps, eats, and breathes customers”. Lanier represents the kind of winning culture that “loves customers, loves its employees, and loves the company’s products”. “The only problem with all of this was that Lanier wasn’t an excellent company; it was a dead company, a shot-through- the-head dinosaur whose sluggish nervous system hadn’t yet gotten round to telling the rest of its body to lie down and die.” 25
  26. Monitoring the radar screen of promising practice Having analysed the “white papers” and research reports of This is talent management as a constant scanning of: scores of best practice talent management publications, there is an overwhelming sense of how similar it all is. Best practice talent  unusual organisations achieving remarkable outcomes management is a remarkably standardised bundle of activity. rather than copy the approach of the “usual suspects” of best practice. This is to look at organisations in very There may be a good reason. It could be there is an established different sectors and industries to locate imaginative ideas formula that works. Any sensible talent management game plan about the working practices they have introduced that may therefore is about the speed of adopting and implementing this be driving superior levels of organisational performance. standard set of practices. We are sceptical; the evidence base does not indicate that a strategy of best practice delivers superior  emerging activity¹ that indicates ingenuity in exploring levels of organisational performance. ways to optimise business performance through the willingness to abandon conventional thinking and take risks Our view is that we have ended up with this familiar package of and experiment with new processes. “best practice” because of the “me too” nature of the talent management industry. We have believed the sales pitches of the  interesting ideas that are bubbling their way through from conventional vendors based on a routine but flawed research original research, informed peer debate to imaginative methodology, attended the same conferences and seminars to pilots. The trick is to spot their relevance and application for discuss the conclusions of this research, and shared the same our business before our rivals. assumptions about what good talent management looks like. It’s a low risk approach, but not one that has driven significant innovation. Despite the suggestion from the industry that we’re “going to talent hell in a handcart”, we disagree. (Or if we are, it is because we continue to accept the standard solution.) One of our objections to the best practice talent management enterprise has been the way its prescription has stifled genuine creativity about the different strategies and tactics that enhance individual, team and overall corporate performance. 1. See for example, 26
  27. An executive debate about the past, present and future The talent management professionals we work with know the reality. Talent management hinges on a series of iterative Defining the objective, scope, conversations at executive levels to review the organisation and: and advantage requires trade-  the past, in particular the culture that has evolved over the offs. years, and whether it is helping or hindering. It also involves a review of the legacy of our talent, and a willingness to David Collis & Michael Rukstad make objective decisions about individuals who are able to progress to take on new challenges rather than those still fighting old business battles.  the present, and the structure that is in place and how well this template of organisational design will coordinate and direct future time and effort. This is also the willingness to face the facts in the review of the breadth and depth of our current professional and executive talent to pinpoint immediate performance problems and retention risks.  the future, and the extent of our strategic ambitions and how different these are to current business priorities. This can be a keen sighted view of how best to reposition the organisation for the long-term and a rethink of the talent requirement. Or a reckless plan which fails in implementation, constrained by a lack of experience and skill in those critical roles that represent the battle ground with our competitors. These conversations, conducted with a combination of rigour and creativity, will assess the kinds of trade offs that need to be made in finding the balance between the ideal and the do-able. © AM Azure Consulting Ltd 2012 27
  28. Establishing an actionable game plan Working through the issues produces a talent management A clear consensus of what talent management means for our game plan that reflects the trade offs we think will optimise the organisation current and future performance of people. Here we have to think This is clarity about the scope and focus of talent management. It is strategically about those actions that might make an immediate also an understanding of how we want to position talent management impact vs. those that will build organisational versatility for the within our organisation, and the principles that will underpin our longer-term. proposed approach. This is talent management not as a high level schemata of a A map to get us from here to there best practice framework, but the nuts and bolts of hard thinking This is an insight into what is in currently in place and can be built on and intensive stakeholder debate to provide: to make progress, what we will need to abandon as no longer relevant to our future, and what we will need to design and introduce. Our map should also incorporate a statement of future success, and the metrics that will indicate progress and evaluate impact. A plan that outlines specific priorities for the activities we see as critical to our approach to talent management This plan, to be credible, reflects the level of investment (time and resource) that needs to be made based on the gap between our current organisational readiness and our level of ambition. It also clarifies the sequence of activity to outline a sensible running order of activity based on the importance and urgency of the issues balanced with the “art of the possible”. Best practices are only best when they’re applied in a A set of accountabilities within our organisational calendar to connect the loop of business planning and performance and talent given context; what works for management, and that annual ritual of the succession plan for one company may not work in corporate governance. At one level, this is an overarching process map to outline the timing of the inputs and outputs of activity. At another. another level it pinpoints the commitments of “who does what and when” within an infrastructure of information flows and decision Guenter Stahl making. 28
  29. Best fit as getting real about organisational realities Wise talent management professionals mistrust the kind of If the big global consultancies have the full tool kit of “strategic solutions that are: alignment”, the niche consultancy players have a hammer. But it is a hammer that can be used in any number of organisational The “big thing of strategic alignment”, those expensive scenarios. consultancy programmes which require extensive diagnosis to produce a neat framework that connects the pieces of the jigsaw. Both perspectives operate within the mind set of “best practice” They know this is talent management as fantasy, impressive in talent management, the assumption that there is an established Boardroom presentations but extraordinarily difficult to implement way of doing things. in the real world. And once put in place, invariably out-of-date, and no longer fit for purpose. Getting to a talent management “best fit” game plan might require the tough work of debate and decision making around hard It is easy to imagine an organisational scenario of change when choices. But if it’s an easy talent management solution, the the pursuit of strategic alignment might be the worst thing we chances are we haven’t found an approach that will drive could do. Our carefully designed and inter-connected talent sustained performance for the distinctives of our organisation and management jigsaw might look good. It might also make an how it plans to compete for the future. organisation more, not less vulnerable, to the snakes and ladders of business turbulence¹. The survival and success of our organisations hinges on a combination of skill and luck. Luck may or may not smile on our The “one thing” of tactical intervention. This is the talent business, but skill in the strategies and tactics we deploy in talent management “hammer” in search of the “nails” of organisational management will optimise the chances that we endure and thrive. problems. There is no “one thing” solution that will work for all organisations, however successful it has been in another firm. And the introduction of that one thing - implemented without an understanding of context - may be positively disruptive and damaging. Good advice comes with a rationale so you can tell when it becomes bad advice Raymond Chen 1. In “Anti Fragile”, Nassim Taleb makes the point that these systems simply provide the illusion of resilience whilst in fact making them more fragile. © AM Azure Consulting Ltd 2012 29
  30. AM Azure Established in 1994, we combine evidence based practice and If you are interested in our approach to talent management, pragmatic innovation. We: and the processes we apply for “best fit”, call us on:  summarise complexity to provide evidence based solutions  44 (0) 1608 654007 that are pragmatic and build and maintain momentum for our  or email clients. We don’t over complicate what in fact is often quite “simple”. But we know what is genuinely difficult.  help trouble-shoot the messy organisational problems to see the key issues, identify options and put in place actionable plans that make progress.  cut to the chase to focus on the distinctive challenges of our clients. We don’t embark on over-engineered diagnostic methodologies that result in a generic solution we had in the “back of our pockets” all along. But we do enjoy the innovation that results from our clients with great ideas and want help in translating them into practical applications.  draw on an extensive research base, library of resource and range of tool kits, and up-to-date thinking to help design and implement practical solutions quickly.  stay well clear of any talent management project that takes more than six months to implement. We don’t enjoy the boredom of long-winded project management meetings. And neither do our clients who want to make things happen and see results. © AM Azure Consulting Ltd 2012 30