The rise and fall of talent management
Nurturing talent is a long-term, often resource-hungry exercise that may be difficult to justify during a recession. How will it be viewed once the economy revives?
On this page:
Is talent
management recovering?
Linking talent management and
business strategy
Adapting talent management
The perils of neglecting talent management.
Over the past three years, the proportion of employers undertaking talent management activities has fallen from about half to just over one-third, according to research carried out for the Chartered Institute of Personnel and Development (CIPD). It concludes that cost is creating a barrier to their use.
Where talent management is being undertaken, it often falls well short of best practice. The consultancy Talent Q's 2009 Talent Management Survey of 189 senior HR practitioners found that only 44% had a strategy clearly aligned with business objectives, and less than one-third had a strategy that took account of the present economic situation. Because fewer than one in five bothered to assess the return on investment, Talent Q warns that "a slash and burn approach to budgets that are hard to defend may cause lasting damage to organisational capability".
However, one trend that emerged in the CIPD research, which is based on responses from 859 members, does suggest that more effective use of talent management is being made in response to the recession. Among those companies practising it, the proportion backed by a formal strategy has increased from 40% to 60% since 2006.
Is talent management recovering?
Philip Clarke, co-owner and director of HR consultancy Independent, is optimistic that the importance of talent management is recovering, partly because the recession has resulted in a marked shift away from big salaries and bonuses to secure talent. "There's still a lot of that in the system, but the conclusion that many companies have jumped to is how do we build a very strong and loyal talent base in an organisation over a long period of time, because that's how to build sustainable success."
Caroline Curtis, head of talent development and performance at high-street bank Abbey, agrees that talent management is becoming more important. "Talented individuals are going to have to deal with a lot of things going on out there, so they need to be more flexible, resilient and robust," she says. "Talent management is becoming even more imperative."
A pilot project started earlier this year involves line managers questioning Abbey's 1,500 regional managers and staff of equivalent rank every year about their aspirations, work-life balance and commitment to the bank. "You do need to spend time understanding your staff," says Curtis. "The only way you can do that is by having a good conversation, but line managers need to be guided about how they have that conversation."
Research by leadership and development training firm Maynard Leigh Associates (MLA) provides other examples of long-term approaches to talent management, despite the recession, among 20 of what it describes as "the UK's best employers". For example, business services firm PricewaterhouseCoopers (PwC) has an "emerging leader" strategy to identify talent and fast-track its development. It is also recruiting 1,000 graduates this year for a variety of roles. And drinks maker Bacardi-Martini is prioritising succession planning by insisting that junior and senior management stay in their jobs for at least two years to foster a deeper level of expertise.
MLA concludes that succession planning is growing in importance as recruitment budgets are squeezed. "Significantly, no company had cut their talent management budget, although most were prioritising their expenditure - for example, on staff communication and succession planning," the report says. All the companies included in the research were linking talent management and business strategy in some way.
Three finalists in this year's Personnel Today Award for Talent Management provide further insight into how a sharper, more innovative approach may actually be linked to the recession.
Airline catering company Gate Gourmet launched a UK leadership development programme that selects candidates using performance assessment tools and competencies that fit in with the business strategy. "Spending a lot of money works in a year of success, but if hard times do hit, you can't keep going," says HR director Vikki Woodison. "We chose to train some of our talent as internal assessors. We don't have to spend lots of money on external consultants to keep the programme going."
Linking talent management to business objectives
Restaurant chain Pizza Express is clear about why a new initiative to encourage entrepreneurial thinking is targeted at the managers of its 40 biggest restaurants. HR director Julie MacDonald says: "We wanted to retain them in the jobs they were doing; they contribute to the bottom line way more than anyone else."
She adds that recession means fighting for every customer. "The only way we believe we can get customers through the door is through excellent people, and the only way to get them is ensuring you give them a great place to work and by developing their business capability."
Talent Q's research suggests that talent management in the public sector has weaker links to overall objectives than other sectors and is less likely to be updated in light of the economic situation. For Kent County Council, however, the recession has been an opportunity to overcome a shortage of younger recruits.
The council has already exceeded its target of creating 220 mostly teenage apprenticeships by next year, and has started providing paid placements for gap-year students as well. Workforce strategy manager Nigel Fairburn says: "Local government is generally seen as having an older workforce; it needs to attract younger people to get that diversity of talent."
Clarke argues that the starting point for the long-term nurturing of talent must be to question the organisation's vision and values. "Once you understand that, you can start to build a long-term talent strategy. You've got to have more vision than improving the share price; there have to be various things to achieve this success, such as how do we want to get there, and how do we want people to help us get there."
Adapting talent management
Andrew Baillie, director of sales for workforce development consultancy Kenexa, believes those visions and values must resonate with the type of people that need to be recruited. In the oil and gas industry, where a shortage of people with experience in drilling is looming, he says corporate social responsibility issues are coming to the fore.
"Assuming the salaries and jobs are relatively similar across the board, people are increasingly conscious of this when going to an employer," he adds. "It's a very fine balancing act. Businesses have to have good shareholder returns but, at the same time, the longevity of their business is dependent on the talent they are bringing in."
There are still plenty of well-run talent management schemes, despite the recession, and some may even have improved as a result of it. One lesson that has been highlighted over the past 18 months is that although nurturing talent is a long-term exercise, it may need to be adapted along the way.
In 2005, engineering consultancy group Mouchel, winner of last year's Personnel Today Award for Talent Management, set a target of expanding its workforce from 5,000 to 15,000 by 2012. It currently employs 11,000 people. The initial emphasis was on recruitment, and line managers were given training in how to do this well. Now the focus is on making sure existing staff have the opportunity to move around the business.
As HR director Ruth Mundy says: "You switch some things off and on more, depending on the circumstances you are in."
The perils of neglecting talent management
Recession causes redundancies, but under-performing staff are not always the first to go. HR consultancy Chiumento warns there is a real danger that the proportion of such staff actually increases once constraints on job mobility are lifted.
While younger employees leave for better salaries and promotion, many of those left are what Chiumento describes as "corporate prisoners", who stay on without being fully engaged in their work. Their numbers include "lifers", who lack career ambition and are often resistant to change, and "economic prisoners" who want to move but fear this will lead to a drop in salary or loss of pension rights.
Chiumento's report, Releasing performance: the new agenda for HR, was published last month and is based on a survey of 1,000 employees with established careers in office or professional services. It warns that corporate prisoners create drag on organisational performance when this needs to be at an optimum for businesses to survive.
Director Ian Gooden explains that the prisoner definitions emerged through conversations with clients. "The reason we did this was to generate debate. We've come with a framework of language which helps people discuss a very real issue."
The report suggests that ways to "free" prisoners can include reviewing reward strategies and giving managers the courage, skill and tools to talk to staff about careers and encourage honest feedback about career potential. Gooden says it is also important to avoid recruiting more potential prisoners in the rush for new talent. "On the one hand you have short-term tactical recruitment, and on the other you have people working on long-term succession planning and talent pipelines. You need to get the two working together. One of the reasons some people are prisoners now is that back in the days when the so-called war for talent was at its peak, people weren't focused on long-term performance."
