Talent tests managers to do better

Published in the National Business Review of 4 July 2008

Managing talent has a high priority in most organisations but the senior managers say they don't know how to do it well, an international survey has revealed.

The findings come from a study by Development Dimensions International, the research arm of the Sheffield organisation working with the Economist Intelligence Unit.

DDI senior vice president David Tessman-Keys presented the findings to business leaders in Auckland and Wellington.

Leadership was a major business priority and the value of human capital had increased according to a report by Kaplan and Norton cited in the DDI study. In 1984 human capital was estimated to be 38% of the value of an organisation with physical capital at 62%. In 2004 that had reversed to 80% - 20% in favour of human capital.

Talent management was now regarded as more important than any other priorities by two thirds of senior (non HR) leaders according to DDI study.

But 55% of the leaders in the same study felt that their firm's performance would suffer because of poor talent management. Seventy per cent of CFOs felt that way.

David Tessman-Keys said the main disconnect was between intent and action.

"Managers say 'I know it's important and I know I have to do something, but I don't know how to get there'. "55% said they 'rarely' or 'never' reviewed talent or discussed their progress. 55% also agree that their organisations are only fair or poor at identifying talent," he said.

To cross the divide from being willing but unable to active management of talent, the personal commitment of the chief executive was the factor that made the single biggest difference, Mr Tessman-Keys said. "It's ownership at a personal level, not just sponsorship."

Making transitions in jobs was the area of greatest difficulty for people and the greatest uncertainty for organisations.

A person performing well in one job wasn't necessarily suited to another job "because they take their personal attributes and experiences with them to the new role. A tendency to micromanage might be acceptable and even useful in operations, but it is a handicap in strategic management."

Successful organisations started at the bottom by identifying their informal and emerging leaders and developing a plan for each of them.

The number one factor identified in growing talent was receptivity to feedback.

This was based on a study of the United States Olympic gymnastics team where all the members were already exceptional performers. "How they received and acted on feedback made the biggest difference in how much more they improved," he said.

How it works here

Talent Management is actively used in New Zealand. In 2005 Audit New Zealand won the inaugural Talent Excellence Awards which were set up to encourage organisations to manage the talent of their staff. (NBR Jan 21 2005).

Audit NZ's then GM of human resources and organisational development Denise Cosgrove said at the time that talent management has turned Audit NZ around.

"It had a number of individuals in senior roles who were perceived as having low organisational alignment and the wrong mix of skills. Its business performance was unsustainable and there was a lack of alignment between its strategic direction and its business and people management strategies.

"Our talent management strategy became our HR strategy - now we have total alignment of our people management processes with our organisational strategy."

Talent management has moved from being an HR issue to being a matter for senior management, and Mr Tessman- Keys said he saw "more advanced thinking in government than in the private sector."

However despite the high importance given to managing human capital, organisations failed to execute well.

A majority of the businesses in the study had an alignment with business strategy and their performance management system and had communicated the importance of managing talent.

However only 35% held senior management accountable on this dimension and only 26% of the businesses measured their results.