Performance appraisal is, as we have seen, a summative evaluation of the results achieved by the performer at the end of the year. The compensation system recognizes, rewards and reinforces good performance.
An organization needs to achieve results consistently to guarantee its future existence. To do so, it needs to identify, attract, develop, retain, and renew talent. The talent-management system is designed to do of all this. To do it well, it has to serve the needs of both the individual performer and the organization.
The assessment of potential within the organization begins this process. Part of the data for the assessment of potential is gleaned from how the individual has performed under varying circumstances, situations and challenges during the year to achieve (or fail to achieve) the expected results. It is a real-life assessment center, with observations being made on the job.
There are a number of issues that need to be considered when implementing a talent-management system. These include:
What exactly do we mean by "talent" and "talent management"?
How is talent management different from career/succession planning?
In talent management, are we thinking of the top echelon of high potential and star employees, or are we thinking of all the employees in an organization?
Talent management is a strategic issue. How do we get line managers to put it into operation?
With regionalization, globalization, greater mobility of competent workers, and the emphasis on paying for performance rather than loyalty, will talent management be a worthwhile exercise?
How do we go about identifying, developing, retaining, and renewing talent?
The common understanding of "talent" is that it refers to special individual endowments with regard to creative, artistic, or sporting endeavors. We often think of someone having a gift, a knack or an aptitude for mastering a skill, usually in music, art, literature, a sport, acting, and the like.
Economic connotations of talent have extended to many other fields of human endeavor such as IT, quantitative disciplines, languages, finance, law, medicine, management and other areas of knowledge and their applications.
Indeed, talent goes beyond intuitive skills and insight to include a person's attributes or traits, which might be analytical ability, business acumen, resourcefulness, creativity, single-mindedness, charisma, introversion, extroversion, team-spiritedness, pragmatism, openness, a trusting nature, being meticulous, being careful, natural leadership and any other trait that can contribute to positive results relevant to a specific environment.
In short:
| Talent = acquired skills and knowledge + attributes (including aptitude) |
Talent management in an organizational setting is providing the conditions for the talent-owners within an organization to contribute significantly to the organization's results. Some advocates describe talent management as "optimizing the talent pool."
Talent management has to do with providing a conducive work environment for talent to bloom so as to ensure sustainable results.
A talent-management system provides the framework, the processes, the organizational structures, the people-management policies and the procedures for talent to be enhanced and used effectively. It includes career development and succession planning.
This chapter deals with issues and challenges connected with identifying, sourcing, developing, retaining and renewing talent for organizations of all types.
You may recall the equation—Performance = Willingness + Ability (Talent)—that we discussed in an earlier chapter. Willingness to perform is an essential part of achieving performance results. Some people may be talented, but they may have to be induced or motivated to contribute to results.
Talent management seeks to provide an environment in which people will want to readily commit their talents to achieve great results themselves or through and with others.
Performance management seeks to motivate people at all levels to be willing and be committed to use their skills and knowledge to produce great results within their capabilities.
Talent management is not just about the movers and shakers, the well-trained, well-educated, high-potential individuals within the organization. For such individuals to thrive there has to be a solid support team of acceptable performers with acceptable potential (sometimes referred to as "solid citizens"). There is also talent in them but in a different shade.
Current thinking is more in terms of human-capital development and management, and treating it as being as important as financial capital management, with a long-term perspective.
Like all forms of assets, some groups of human capital can generate more added value than others, but they all create value as assets of the organization.
Figure 6.1 broadly outlines a typical distribution of talent in a sizeable organization.
Every organization has its core group of consistently high performers whose potential is also estimated to be high. These are the movers and shakers, the stars that everyone looks up to. They are the ones the organization will want to retain for as long as possible, so that they can eventually provide the leadership for the organization. The percentage of such talent in an organization is relatively small.
Next to these are those considered to be of high potential, whose performance is good and who are currently perceived to have potential to be leaders. They will be groomed to eventually succeed or replace the movers.
The solid citizens are the backbone or the engines that keep the organizational operations running. Their performance is of an acceptable standard, and a few might display higher performance and potential than expected, given the right motivation and effective nurturing on the job. Their skills and knowledge will still need to be upgraded to keep the engine running smoothly and to provide a competitive edge.
There will be a small group who will be there to be led and be told what to do. These are the servers, and they are content where they are and with what they do. A few could be nurtured to join the ranks of the solid citizens. If there is a large group of servers in the organization, its competitive position will be weakened.
Then there are the misfits, who do not belong in the organization because their skills, knowledge, critical attributes and personal values do not fit in with the organization's values and business. Example of misfits are slow-moving people working in a fast-paced business; detached, unfeeling and self-serving people working in care-giving institutions; or opinionated people working in service-oriented businesses.
Misfits could be in an organization because of connections, kinship, through historical carry-over, or the result of a selection error. However, in organizations that can make better use of their skills, knowledge and attributes, they could perform well and excel.
A common pitfall is for an organization to dissipate its energy trying to reform the servers and misfits, to the detriment of others who are more productive and promising. Having such misplaced priorities can place the organization in danger of losing its valued talent.
By and large, talent management deals with people working full-time on the regular payroll; that is, those on contracts of service. There are also contingent talent sources that can be tapped when specialist expertise is needed at short notice. These include consultants, specialist outsource providers, and temporary staff, who are engaged for short durations under contracts for service.
And, of course, there is potential external talent that can be engaged in the long term. That will really be enlarging the scope of talent management.
Two sources provide the input for the talent-management system—the assessment of attributes, and the assessment of potential that follows the annual performance appraisal. The purposes of assessing potential are to identify talent in the organization; and to determine how far that talent can be optimized for mutual benefit.
Any job holder has career aspirations, job satisfaction and lifestyle needs. He also wants to use his talents to meet these needs.
The organization, on the other hand, wants to grow in scope, strength and magnitude. These areas of growth should result in financial growth and long-term sustainability.
A person's acquired skills and knowledge can be used to progress up a professional/technical career ladder. Some also have attributes to assume managerial and leadership roles to enhance the expertise of others within the organization. Such people are thus able to provide more and better products and/or services to the customer or end-user than if they were just professional/technical experts.
Many organizations provide a list of desired attributes for managers to look out for in appraising their direct reports, and by which to gauge their direct reports' strengths and weaknesses based on work interactions and observations.
Other organizations also include input on the incumbent's attributes from those who interact with them both within and outside the organization. Outside parties could include suppliers and customers.
Table 6.1 outlines some of the key attributes organizations look for.
Some of these can be those the organization considers to be core attributes. An example would be integrity, which everyone within the organization must possess. Other attributes are specific to a particular job; for example, the ability to work independently, or the ability to lead or manage other specialist contributors.
Before there can be any hope of assessing accurately, there has to be a common and clear understanding of each attribute. Without this, different assessors may have different perceptions and impressions, reducing the validity of the assessments. Having a clear understanding of the intentions and expectations behind each required attribute makes it possible to derive the expected key results areas and key performance indicators that manifest that attribute.
This will reduce disparities in interpretation, especially when we are looking at human qualities. Our own backgrounds and experiences often interfere with our assessment, which is why Table 6.1 incorporates self-assessment, peer-assessment and superior's assessment.
Other, more formal, feedback can be obtained through assessment centers—where personal competencies and attributes are observed and assessed under simulated work activities by a team of trained assessors—and personality-profiling instruments, which are tests to measure personality types or traits. However, the latter may or may not evaluate the attributes that the organization is looking for.
For most organizations, direct observation of the performer in day-to-day work interactions is considered adequate. Perfect measurements of personality traits, types, and attributes seem elusive, and predictability is still an inexact science. However, many organizations do realize that these measures of individual strengths and weaknesses are to ensure company fit and not just job fit.
Table 6.1. Assessment of Attributes—A Sample
Observable Attributes | Very Low | Low | Medium | High | Very High | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SP = Supervisor's Assessment SB = Subordinate's Own Assessment PR = Peer's Assessment | SP | SB | PR | SP | SB | PR | SP | SB | PR | SP | SB | PR | SP | SB | PR |
Leadership Potential Naturally initiates action needed to reach an objective, solve a problem or make a decision | |||||||||||||||
Independent Worker Capable of planning, solving problems and making decisions with minimal reliance on management | |||||||||||||||
Team Player Always has the interest of the group and its objective in mind and willingly contributes time, effort and ideas for the sake of the group's achievement | |||||||||||||||
Abiltiy to Manage Others Capable of getting work done and results through and with others without undue coercion | |||||||||||||||
Pro-Active Takes responsibility and initiates action to achieve results and get things done without waiting to be told | |||||||||||||||
Integrity Behaves strictly to a code of ethics, trustworthy, keeps to his word and delivers | |||||||||||||||
Once an organization has determined the skills, knowledge and attributes that it is looking for, the next stage is to identify who among its human resources has got them and the extent to which they have been mastered.
The assessment of potential takes into account the personal attributes that are critical to the organization's business, as well as the performer's past performance, usually over a period of three years or more.
These two major variables are assumed to influence future success in higher-level jobs or positions, because attributes are a person's innate characteristics, and performance is partly the product of the environment (created consciously or otherwise) for people to excel in, related to their attributes. An example of how potential might be assessed is shown in Table 6.2.
Table 6.2. Assessment of Potential: Attributes and Performance Matrix
Past Performance (Last 3 Years) | |||
|---|---|---|---|
Employee's Attributes | Mostly Exceeded Expectations | Mostly Met Expectations | Mostly Did Not Meet Expectations |
More organization-relevant strengths than weaknesses | High Potential | High Potential | Considerable Potential |
Organization-relevant strengths equal weaknesses | High Potential | Considerable Potential | Low Potential |
More organization-relevant weaknesses than strengths | Considerable Potential | Low Potential | Low Potential |
To resolve borderline cases, appraisers sometimes take into account the impact of the employee's organization-relevant attributes to the business. This impact is evaluated as Very Critical, Critical and Not So Critical.
For past performance, they consider how good and how consistent the employee's performance has been over the previous three years.
Some organizations will only source talent from within, while others will always want to recruit from outside. While recruiting from within tells employees that their performance and/or loyalty are valued, it also runs the risk of putting people in positions for which they are not particularly suited. There is also a danger of fixed mindsets (resulting from having the same people working in the organization for long periods) stifling creativity and new approaches.
Organizations that do not have the internal talent to meet their business needs must recruit from outside. The challenge then is for the new recruits to gain acceptance from their new team mates—direct reports and peers alike. This is where his personal attributes are revealed.
Sourcing external talent is not necessarily limited to recruiting people with experience. The skills and knowledge necessary for business operations can be learned on the job and there are companies that have flourished by making a point of recruiting only fresh graduates and school-leavers with the personal attributes the organization is looking for. This makes business sense, because it is cheaper to train a fresh graduate than to train an experienced worker who has to be employed at a higher pay-scale. It also takes time to change habits of thought and action.
If companies only poached experienced staff from each other, there would be no incentive to train and develop people. This encourages job-hopping, which is detrimental to productivity. In fact, companies that are known for developing their people usually attract a wider talent pool from which to select.
Many seasoned managers consider these to be the factors that make an organization appealing to intending applicants:
Even then, gathering the best talent does not necessarily translate into organizational success, as talent can only bloom under the right conditions. While talent is undoubtedly the basic ingredient for success, much depends on how it is managed.
Organizations have employed various ways of nurturing talent and these have included both on-the-job and off-the-job training. The former include initiatives like job rotation, while the latter might consist of formalized training, coaching, mentoring, running advanced management programs, as well as arranging attachments and project teams.
A colleague once described to me a logical and pragmatic framework for developing talent based on the premise that on-the-job training and development through deployment is still the best assessment center. This is encapsulated in the mobility-options chart shown in Figure 6.2. The chart is used in conjunction with the promotion and placement decisions, after the assessment-of-potential exercise.
Key positions in the organization are identified in the chart. These are positions that require the professional and technical know-how to deliver products and services to the customer. Without these, the organization cannot meet its customers' expectations.
Just as a hospital needs doctors, a restaurant needs chefs, a university needs lecturers and researchers, and a department store needs merchandisers and sales personnel, a manufacturing enterprise needs engineers, quality controllers and production personnel.
These core positions need key support functions such as IT, Finance, Accounting, HR, Purchasing and other specializations necessary in a globalized enterprise. These are the benchmark jobs that are used in salary surveys.
For each key position, the managerial and professional/technical competencies are identified. More importantly, the attributes that will affect the successful performance of the managerial and professional/technical competencies are also identified. Some of these are core organizational and personal values—such as team spirit, good interpersonal relations, and integrity.
Table 6.3. Conventional Individual Promotability and Placement Assessment Recommendation
Confidential Recommendation (Name of position) | |||
|---|---|---|---|
Promotability | To Managerial Position | Within Same Professional/Technical Ladder | To Different Professional/Technical Function |
Now | |||
Within 2–3 years | |||
In 4–5 years | |||
Explanation (if any) | |||
Placement | Remain In Current Position | Lateral Transfer to Better Utilize Abilities | Lateral Transfer for Development | Downgrade to Enable Employee to Perform Better | Terminate |
|---|---|---|---|---|---|
Within the next year | |||||
Within 2–3 years | |||||
Within 4–5years | |||||
Explanation(if any) |
Others are specific to the position. For sales positions, extroversion and single-mindedness are necessary. For some positions, meticulousness and thoroughness will be critical. For others, a creative and innovative predisposition will be valuable.
The talent managers of this key position will have to identify those that can fill the position and the vertical or promotional possibilities open to the position holder. There are also lateral or placement positions that the key position holder can move to, or where others can move from, for developing competencies and further strengthening attributes.
The Mobility Options Chart can be used in conjunction with the Individual Promotability and Placement Assessment such as that shown in Table 6.3.
In recommending promotability and placement, the recommender takes into account the employee's potential, as well as positions available in the organization's succession or renewal plan. This means that an employee with potential sometimes may not be promoted or placed, as there may not be vacancies available.
However, employees with high or considerable potential will normally be shortlisted for consideration for some vacancies. The final selection will depend on how the recommended employee compares with others against the selection criteria.
For promotability, the focus is more on when rather than where. Possible interpretations of the meaning of the various sections of the template are given below.
For placement, the focus is more on where rather than when.
Promotability and placement assessments are confidential, as predicting potential is an inexact science, and different assessors predict differently based on their own backgrounds and experiences. Revealing the assessment could either heighten expectations, which may not be fulfilled, or de-motivate or discourage. In any event, people can and do change in different environments and in different periods of their life.
On balance, transparency has to be sacrificed for pragmatic considerations. It is sufficient for the employee to know that his potential to grow with the organization is constantly being updated, and that there is a career path for him. This is in the interests of both the performer and the organization.
Organizations need to deploy and develop talent, but they also need to take into consideration the employee's career preferences, aspirations, work interests, and financial aspirations, recording their discussions with the employee on forms similar to that shown in Table 6.4.
Table 6.4. Employee Career Preferences
Career Preferences | Remain In Present Position | Move to Managerial Position in: __________ (Division/Department) | Move to Professional/Technical Position in: __________ (Division/Department) |
|---|---|---|---|
Within the next year | |||
Within 2–3years | |||
In 4–5 years |
Job satisfaction is a major factor in influencing talent retention, yet the employee's personal values, work values, and life interests—which have an impact on job satisfaction—are often overlooked. Personal values include such things as stability, spontaneity, desire to belong, financial or psychological security, self-improvement, self-control, risk-taking, or mental stimulation.
Work values that would have an impact on job satisfaction are factors such as people contact, solitude, variety, creativity, accuracy and precision, authority, influence, decision-making, interaction, competition, and challenge. Life interests, which are crucial for maintaining a healthy work–life balance, might include travel, reading, family activities, concerts and plays, hobbies, music, sports, or other recreational pursuits.
All these influences and preferences together contribute to a person's personality make-up and career satisfaction. They can affect success on the job, especially in a new environment with new managerial styles, new colleagues and work culture. If mismanaged, star performers can turn into non-performers.
As we saw earlier, an employee's decision to leave is influenced by both external pull factors and push factors from within his current employment. A list of some of the most common reasons for moving are listed in the table below.
Table 6.5. Factors Influencing a Change of Employment
Common Pull Factors | Common Push Factors |
|---|---|
substantially higher pay | passed over for promotion |
better tax-sheltered benefits | unhappy with appraisal rating |
greater scope for advancement | limited opportunities for job enlargement |
new experiences and challenges | no job security |
bigger organization | little or no training provided |
opportunities for training | |
good organizational climate | daily fire-fighting |
well-developed management system | no job satisfaction |
micro management | |
strong corporate values | work too routine |
innovative and cutting-edge work | uncaring superior |
Organizations need to pay more attention to internal push factors, rather than just trying to mitigate external pull factors in talent retention. To illustrate this, I gave participants at the Resu training session the following case study to analyze and discuss the various pull and push factors at work here.
SB Associates is in the business of sourcing specialist speakers for themed conferences, conventions, and corporate retreats. The company has a large data bank of such speakers but does not act as their sole agent.
SB Associates has a sales team of experienced client service advisors (CSAs) reporting to a Client Services Manager. The CSAs are paid fixed salaries and variable bonuses based on gross revenue, with no commissions.
For each client, a CSA sources the appropriate specialist speaker or panel of speakers based on a preliminary discussion with the client on their program needs and budgets. When a match is found, the CSA introduces the speaker to the client. They would then design and customize the content.
SB Associates prepares separate contracts between itself and the client and between itself and the speaker.
Since the company's inception, this business model has enabled the CSAs to manage a business within a business. It was designed to authorize them to identify suitable speakers and to negotiate fees, both with the client and the speaker.
Recently, in a bid to grow the business, the management at SB Associates decided to elevate the market position of the business as a top-end provider and to differentiate itself from other agencies providing similar services. Fees had been increased accordingly.
A pool of new specialist resources was identified to augment and eventually to replace the older, more costly, speakers. These new speakers would command lower fees than the seasoned regulars formerly engaged by the organization, thus increasing the profit margins for SB Associates.
Instructions were given to CSAs to use the new, relatively inexperienced but competent speakers, unless the client specifically requested an experienced speaker.
The quality of the matches, which had up till then been handled by the CSAs, also had to be audited. Several fresh MBA holders were hired to perform quality audits, the thinking being that they would bring fresh ideas and different insights.
During the first meeting between a CSA and the client, an auditor had to be present and would later give an opinion on the client's requirements and the issues discussed. The auditors were to review and endorse both the speakers and the customized content they prepared for the client.
Under the new arrangements, fees had to be approved by the Client Services Manager before the CSAs could inform the speakers and the clients.
Within a couple of months of the new business model being implemented, the CSAs resigned one after another; some to start their own businesses, some to join a clients' organization. Others said they just wanted to take a break before looking for another job.
Eventually the Client Services Manager also left.
After reviewing the case in their various groups, the participants shared their observations and reflections, generally basing their comments on their specific areas of expertise.
Ravi, from a recruitment perspective, felt that: "If the purpose of recruiting the auditors was to add value to the business, then some operational experience could have been included in the selection criteria besides freshness and new ideas as newly-minted MBAs. By and large, participants at conferences, conventions, and company retreats are all practitioners. They expect program content to cater to their actual working needs."
From a sales perspective, Sally observed that the CSAs had been "reduced from empowered sales professionals to order-takers, messengers and meeting arrangers." The additional layers of checking, reviewing and auditing that were put in place gave "no measurable value-added to the business processes."
For Frank, the major issue was one of delegation: "It appears that the sales team had all the accountability for results but little authority, and the auditors had all the authority but remote accountability for results. Delegation principles require that authority should be commensurate with the accountabilities expected."
Eugene looked at it from a service-delivery angle, which also had reference to the deployment of talent. "In improving business processes, we try to reduce the number of steps to deliver a product or service to the customer, but in this case, this organization is increasing the steps, delaying response and increasing payroll costs with insignificant value-added to each stage. I don't think it provided an environment conducive for the sales talent to flourish."
Others felt that if the purpose of auditors' reviews and endorsements was to ensure quality control, this was a task that the specialist speakers themselves would be better placed to perform as they were the domain experts and would have their reputations to protect. It was in their interests to meet the client's needs because satisfied clients would use them again.
With regard to the series of resignations, the groups had considerable sympathy with the frustrations experienced by the CSAs, who, they felt, had cause to "feel very redundant." The overall conclusion was that this was "a clear cut case of push factors making it difficult to retain talent."
From this case it is clear that values, organizational structure, and the product/service delivery process can all have an impact on talent management with respect to recruitment, deployment, and retention.
Most business models reflect the value systems of their proponents and have ramifications for the way the organization is structured. Many years ago, when I first started out on a management career, there were two distinct management concepts that held sway. One held that, by and large, workers could not be trusted to put in their best unless controlled, coerced, directed, and checked. Today, we call that micro-managing. The other believed that most people would want to put in a good day's work if entrusted to do so and would exercise self-direction. Today we call that empowerment.
Through an organization's structure may appear sound in concept, in practice there are often role conflicts and blurred authority and accountabilities that cause frustrations and act as push factors. No amount of teambuilding can overcome built-in organizational dysfunctions.
These basic management principles are still being breached in many organizations, despite a plethora of management literature and courses on the latest concepts and techniques.
The bottom line is that retention of talent is not just a matter of being the best paymaster, or providing a suite of the best benefits. Job satisfaction that comes from having a healthy working environment is a potent retention factor in talent management.
In the above case, the talent-management system broke down and failed to retain its proven talent. As a consequence, the company not only incurred recruitment costs but also suffered damage to its image, as well as loss of credibility, goodwill and established personal and business relationships.
We'll begin this section by returning to a question that was raised earlier: Is talent management a futile exercise in view of globalization and the increased mobility of talent that it makes possible?
There is an assumption that once recruited, talent should remain with the organization for as long as possible, to recover recruitment and development costs and to derive returns on these investments. This is different from retaining talent for as long as that talent remains effective and relevant to the business of the day.
Talent, as we have seen, is the embodiment of an individual's acquired skills, knowledge and personal attributes that are critical to an organization's deliverables. This also assumes that the individual's personal values are also in harmony with that of the organization—an important consideration in light of all the high-profile corporate malpractices that have surfaced in recent times.
Attitude, skills, knowledge and even attributes may become outdated and their effectiveness can be reduced. A talented person who can produce results independently may not be as effective if new products and services require teamwork to produce results.
How should talent be managed, when there's a need to constantly renew it without having to compete with external pull factors?
The world renowned Vienna Boys' Choir was officially founded in 1924 and it is still singing to appreciative modern audiences worldwide. The Choir consists of boys aged 10 to 14. At any one time, there are about 100 members, divided into four touring choirs.
When the choristers reach the age of 14, their voices are likely to change, yet the high vocal standards of the Choir have to be maintained. This means a constant renewal of these talented choristers is necessary. Recruitment, selection and development to replace those leaving are ongoing activities.
Though the tenure of talent in a business organization is somewhat longer than that in the Choir, the perspective on talent management should be the same. Talent must be recruited, selected, nurtured, deployed, retained, and renewed for as long as that talent is relevant and necessary for the organization.
The old management phrase for talent renewal is "succession planning"—having the right talent in the right place at the right time. Employees see themselves as owners of an asset—their talent—that is being sought. They want to choose where they can invest that asset. If an organization offers them an investment opportunity, then it can be a mutually beneficial and enhancing partnership.
The focus for employees is on where, with whom, and how best to invest their talent. The returns on their investments are not conceived in material terms only. They want to enhance their assets, and derive satisfaction from what they do, in accordance with their personal values and preferred lifestyles.
Therefore, the other old management buzzwords "career development" go hand-in-hand with succession planning to facilitate talent renewal. The focus for organizations now is more on finding the right talent to perform the critical jobs that ensure the organization's long-term viability under differing business conditions. This nexus of interests is illustrated in Figure 6.3.
A talent-management system is established to balance the long-term career needs of the talent owner and the long-term business needs of the organization. The talent owner wants to optimize his talent and so does the organization.
Talent management is not confined to the select few high-fliers in an organization.
Real talent embodies not only skills, knowledge and relevant attributes, but also the talent owner's value system that harmonizes with that of the organization.
Despite higher talent mobility with globalization, talent management is still a strategic exercise to undertake.
A comprehensive in-house talent-management system covers identifying, sourcing, developing, retaining and renewing talent for long-term sustainability.
Talent identification is not an exact science.
Developing talent is an investment.
Talent does not need to be retained forever.
Talent needs to be renewed.