TALENT MANAGEMENT
Talent mis-management?
Talent management would be high up on a list of most organisations’ strategic objectives, but a recent report by the Cranfield School of Management suggests that, in practice, the issue is not receiving the attention it deserves.
Commissioned by Capital Consulting, the research finds that many UK businesses are not developing their most important staff and even where they are, they are often not putting enough investment into the area to implement programmes effectively.
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Talent management is essential for a number of reasons, says Cranfield. Firstly, rapid turnover of senior managers results in a shortage of supply of high quality people at the top of the organisation putting pressure on succession planning. Further, if such shortages occur, the only option is to recruit executive level candidates incurring the costs associated with head hunters.
Another reason is the growth in “knowledge workers” who are becoming increasingly important in an economy characterised by professional and technical occupations. Over the last decade the market for such workers has taken on a global dimension meaning it is more important than ever to manage such staff effectively.
Three stages to effective talent management
Based on its findings, the report identifies three stages firms need to undergo in order to have effective talent management programmes in place. The stages are:
1. Developing an effective and consistent method of defining and identifying talent.
2. Finding effective ways to attract, develop and manage the staff involved.
3. Designing a consistent, effective way of measuring the impact of talent management processes.
Research methodology
These conclusions were reached following research based on a survey of over 600 organisations supplemented by more in-depth examinations of five case-study companies exhibiting best practice in the area.
The purpose of the research was to examine the “systematic processes for the attraction, development and management of talented people within UK organisations.”
Specifically, it aimed to answer five questions:
More specifically, the report also sought to ask whether talent management should be focused on a few, high potential staff such as the top management group, strategically important groups, or indeed all staff.
Case-study research
The five case studies illustrated that some companies have found effective ways of answering the questions posed above. These included Cobham, American Express, Britvic, Tower Hamlets and a financial services organisation.
Those responsible for talent management in these organisations were asked what they meant by the term, how they go about identifying talent and how they develop it. What was found was that all the companies had approaches to deal with such questions, but while there were some common themes, their methods differed somewhat.
Cobham, for example, had started targeting new graduates, while American Express implemented talent assessments for staff above manager level. In contrast, Britvic used a performance and talent toolkit including development workshops with the ability to accelerate staff forward in order that they can become “successors”.
Some of these organisations also highlighted a number of ways to measure the impact of their approaches. Methods included:
Case studies supplemented by survey data
To supplement information from the case studies the study also used a survey of over 600 companies that utilised talent management. To begin with, survey participants were asked what they meant by “talent” with the results illustrating that there was no common definition. For example, around a half of firms included all of their staff, compared with the rest that used a mix of terms such as “leadership potential”, “key contributors” or “superior performers”.
Other survey findings included:
Talent management strategy
Overall just 41% had a talent management strategy with organisations in the service sector most likely to have such a policy.
Challenges to talent management
Respondents said that the greatest challenge to talent management was retaining leadership (57%), while identifying talent (47%) was rated next highest.
Proportion of payroll budget spent on talent management
On average, organisations spent 4.7% of their annual payroll budget on talent management activities.
Methods used to develop talented people
Methods included on-the-job training (43%), external qualifications/courses (40%) and in-house development programmes (35%). Coaching, mentoring and shadowing also featured quite strongly, mentioned by around 30% of respondents.
Methods used for talent management
No one method dominated but succession planning was the most common answer mentioned by 28% of companies followed by use of HR technology (18%) and measuring the engagement or commitment of key talent (17%). Organisations were less likely to use rewards to manage talent.
Attracting talent
Again, there was no one method dominating in this area but 28% of organisations sought to build their brand while 26% monitored the diversity of applications and a fifth used recruitment consultants.
Monitoring rate of return on investment in talent management
Various questions in the survey helped illustrate that only a minority of organisations monitored the rate of return on talent management processes. Where they did, most organisations focused on the costs of the various initiatives.
Talent management model developed
Based on its findings the study produced a talent management model illustrating how the process moves from the evaluation stage through to business and HR strategy. It shows how this is a continuous process as available talent and business needs are constantly changing.
A final word
Dr Emma Parry, research fellow at Cranfield School of Management, says the report should serve as a "wake up call" to employers at a time when mounting global competition and the changing demographics mean the need for strategic management of human capital has never been greater. “The ‘disconnect’ between what senior managers are saying and what they are doing is very worrying. It’s clear that, in the main, their actions have not caught up with their rhetoric when it comes to talent management.”
Want to know more?
The research was conducted by the Cranfield School of Management between 10 April and 15 May 2007. It consisted of an online survey, to which 608 HR directors responded, and five in-depth case-study interviews of organisations which illustrated "best practice" talent management.
The range of organisation sizes, industry sectors and geographical regions are sufficient to make the results generally representative of the entire UK business population.
Capital Consulting is a leading UK recruitment outsourcing provider. Working in close partnership with high-profile clients, Capital Consulting’s team of over 200 recruitment experts across the UK, Europe and Asia “delivers competitive advantage in the increasingly challenging market for talent”. More details are available at www.capitalconsulting.com
Cranfield School of Management is a “world-class university business school, renowned for its strong links with industry and business”. It is committed to providing practical management solutions through a range of activities including postgraduate degree programmes, management development, research and consultancy. Its web site is at www.som.cranfield.ac.uk/som