In today’s increasingly complex business environment, companies are competing fiercely for talent as they struggle to maintain the pace of innovation. Talent is perhaps the only remaining sustainable competitive advantage in the globalized economy where access to capital seems limitless and the speed of change relentless.
The traditional corporate arena is in the process of being redefined. In the global struggle for market share, winning the battle for the most capable leaders can be decisive. While CEO turnover, and that of other c-level executives, continues on a frenetic pace, recent studies by renowned management and leadership experts Jim Collins, Peter Capelli, and Nitin Nohria all suggest that the quality of leadership is the single most important driver of corporate performance and shareholder value.
While talent is critical to success, it is also becoming scarcer by the day. Numerous studies indicate a seismic demographic shift, pointing to a continual decline in the executive population. In addition, the 'supply' problem is further compounded by the progressively more sophisticated competencies being demanded of the executives of today and tomorrow. In an increasingly complex and globally integrated environment, managers need to demonstrate cultural versatility, entrepreneurial ability and the influencing skills to manage geographically dispersed teams within matrixed organizations.
The specialization and complexity being defined in many of today’s emerging roles is staggering. CIO’s are expected to transform into Chief Efficiency Officers, Chief Security Officers are no longer just minding the activity at the front door, risk management is front of most of today’s CEOs minds; at the same time, many companies struggle to maintain a true connection with their customer and anyone who can truly drive business strategy and transformation is being sought after with rock-star status.
Further, the growing dominance of private capital has intensified the competition for talent. Well-financed private equity firms, unaffected by public outcry on compensation inequities, are offering wealth-creation opportunities that many public companies cannot afford to match. In a recent McKinsey study, an overwhelming majority of corporate officers surveyed stated that their companies had 'insufficient talent sometimes” or were 'chronically talent-short across the board'. Clearly, companies that focus on raising the talent quotient and innovate in this area today will rule the markets tomorrow.
Aligning talent with strategy
The question arises then, what can companies do to compete effectively in the market for talent? In our experience, companies that seek a dual alignment of their talent management strategies are winning the war. That means not only being aligned with their strategic business objectives, but also with the career objectives and personal aspirations of top talent. Then, a relentless diligence in communicating this alignment effectively through a corporate talent brand is necessary to attract and retain the best and brightest.
That communication extends to all interactions with talent, both present and prospective, in much the same way as the most successful brands manage their interactions with consumers. In order to truly connect with top talent, an investment in flexibility and understanding of the key drivers that influence executives’ decisions to join and remain with a company is critical. From the very first communication and at each and every touch point thereafter, optimize the relationship by aligning with the interests and needs of top talent. This begins with the interview process and continues through ongoing performance management, skills development, and all other interactions.
Talent-focused organizations understand that, while compensation remains important, it is the corporate fabric, the opportunity for challenge and personal development opportunities, and the internal talent quotient that drive choice and loyalty. The very best like to work with the very best. Top performers also engage in active career management, and seek opportunities to develop the skills, competencies, and relationships that are required for them to stay at their peak and continue to grow. They expect to be assigned roles that prepare them for increasingly complex and professionally challenging opportunities.
At the same time, executives have become more mobile, ever more so globally. Ever since the employee/employer 'lifetime contract' was broken in the late 1970s, executives are rarely spending their entire career with one company. With this in mind, one might assume that organizations that invest heavily in their talent run the risk of becoming the training ground for other organizations content to poach this investment. On the contrary, it is no secret that companies that have diligently and faithfully built their talent brand – companies like General Electric, Nokia, Procter & Gamble and Pepsi – are also most effective at retaining their talent. At these companies, building a talent brand is a mindset that is all-pervasive, a company-wide strategic imperative that is deeply rooted in the company’s DNA and clearly communicated internally as well as externally.
Reach the 'target customer'
To build a talent brand that attracts and retains top talent, it helps to build the overall corporate brand. Clearly, executives respond quickly to calls from our office when pitching market leaders and innovators; they are also less likely to leave these organizations. Like a consumer brand, the talent brand is built through clear, effective use of all communication channels to reach the 'target customer'. Proactive management of every touch point with current and potential employees is critical, leaving no ambiguity about the company’s commitment to a system of talent management in which employees are treated as vital customers of the business.
This mindset needs to be deliberately applied to the interview process, all the way through final candidate selection, referencing, compensation negotiations and on-boarding. The stark reality is that very few companies develop a thoughtful strategy about who should do the interviewing and what each person should be assessing, as well as the value proposition they should be communicating about their organization and the opportunity at hand. Word of mouth, within and beyond an organization, is built on these interactions and goes a long way in reinforcing the talent brand, positively or negatively.
Great brands are built on great experiences, not just great messages. Companies need to go beyond simply paying lip service to talent management by jotting it onto the corporate agenda. Talent management needs to be woven into the fabric and structure of the organization. The cornerstones of talent management are an effective competency-based assessment mechanism for both internal and external talent, an objective review and feedback process, recognizing and providing development opportunities for top talent, and decisive action in the case of underperformers. Only when talent management is a CEO priority can an organization align its strategic and business processes with its talent management objectives. When sponsorship begins at the top and is infused throughout the organization – when it is part of the DNA and culture – talent within and beyond the organization gets the message that their needs will be understood and met by this employer.
Executive transition is critical to long-term success
Successfully on-boarding senior executives is one area we see tremendous room for improvement among most companies. We view this as a shared responsibility between the incoming executive and the hiring organization. The initial few months are perhaps the most crucial for building loyalty and ensuring eventual success. It is no secret that the cost of a failed hire is immeasurably high and causes negative reverberations throughout the organization. Consequently, a well-orchestrated integration process is critical to enhancing the likelihood of success in the new assignment. It is imperative for top management or the board to take responsibility for the success of the new hire, and to facilitate the cultural acclimatization of the new executive in the critical first months. It is equally important to establish a two-way feedback mechanism that highlights and resolves early integration issues and challenges.
Flexibility in approach
In order to build retention, talent must be continuously nurtured, invested in, and built upon in tandem with the company’s business needs and strategies. Development plans and retention strategies, however, cannot be a 'one-size-fits-all' proposition, as that approach will no longer deliver the desired results with today’s talent. Rather, look to find solutions specific to individual challenges and complexities. To an increasing extent, companies are looking to ensure alignment with individual needs and goals. The focus must be on making individual employees feel valued by even large, distributed organizations and ensuring that this customization drives desired behaviors across an increasingly diverse workforce.
If an organization is to stay aligned with the needs of its high performers, talent management cannot be a one-time systematic review, but must be an ongoing part of a company’s core strategy. The talent market is highly fluid, demanding and dynamic. The needs of the organization and the needs of top talent are in constant flux and require a continuous assessment and renewal. Companies must be innovative in terms of how and where they look for new talent, and insightful enough to anticipate the new types of role that will emerge as the global markets change. As many of our clients are experiencing, the war for talent is a fact of today’s economy and tomorrow’s business challenge; and few battles are as important to the success of companies in all industries. Those companies that are best positioned to win this war will be clearly and strategically aligned with the personal and professional needs of top performers, and will capture their loyalty by continually renewing this alignment. Building a talent brand well-known in this regard, with the organizational capability to deliver, is and will remain the ultimate competitive advantage for years to come.