Leaders fret about whether they have the talent they need to compete in the ever-changing market in which they play. This is one of those nagging concerns for CEOs. One of the reasons this concern doesn’t go away is many CEOs recognize that their company doesn’t have the talent management skills that enable a stable and predictable flow of quality leaders. Companies go through a predictable set of stages as they grow this organizational capability, as we have written about previously. Understanding the stage of your company’s talent management system provides direction for what your company can do in order to build the processes and culture that allows you to attract, manage, develop, promote, and inspire the right people for your company.
Most companies treat their people strategy as though it’s somehow separate from the running of the business. At most companies “HR people” manage the “people things” and “business people” manage the “business things.” How people management and development came to be viewed as not the responsibility of a business leader at some companies is a discussion for a different day.
Running a business capable of strong consistent results requires a stable and predictable pool of people with the right skills who are right for your culture. Being a good leader means creating a culture where those people grow and find better ways to do their work. Great leadership means having a distinct perspective on what you need from your people, keeping them motivated and improving all the time, and that’s where successful talent management starts.
There are four stages of talent management. Stage 1: Programmatic; Stage 2: Systemic; Stage 3: Strategic, and Stage 4: Cultural.
Stage 1: The Programmatic Stage is when your talent management practices are a set of programs run by HR that have no direct linkage to each other or to the business. The programs may be high quality, but they are generally independent of one another. Competencies — the systems and connective tissue between people practices at a company — don’t exist, or are not consistently applied because they don’t connect to real business needs. If there are competencies, they are more academic and HR focused. Leaders are expected to comply with the requirements of various programs, but rarely show any commitment to them. Programs change frequently, so they create little traction in the business, and over time, this leads to skepticism of HR and its programs.
Stage 2: The Systemic Stage is a set of programs, usually linked by a set of competencies that are used in talent acquisition and promotion, performance evaluations, and succession management. Leaders view the systemic approach more positively than the programmatic approach because the programs build on one another. The process is still viewed as an HR initiative because these tools usually only link with one another in the HR system, and not within the business strategy, goals, and operating model.
Stage 3: The Strategic Stage is when the business strategy and operating model are the starting points for identifying your company’s people needs. Talent management is an organized approach to defining what types of people and skills the company must have to meet its goals now and in the future. Competencies in stage 3 companies tend to be more practical and useful because they are company-specific and actionable. Stage 3 companies develop or remove people with greater confidence based on more clearly defined business requirements. Companies that are strategic in their overall talent management have a real a sense of what kind of skills and people the company needs. Here, talent management is a joint effort between HR and business leadership.
Companies that are the strongest in terms of their people and leadership practices are at Stage 4, The Cultural Stage of talent management. Stage 4 companies appreciate that managing talent is central to managing their business. There are clearly defined processes for attending to their talent pipeline, just like all of the other important aspects of their role. Because leaders recognize the importance of having the right people in the right roles, both formal and informal efforts to accelerate the development of high potential employees often abound. Performance feedback is a daily business activity that helps people to execute better and improve. There is a culture in which it’s clear that the work is important, that the expectations for success are well defined, and that working at the company means you will continue to grow and improve.
There are a few informal ways of determining the stage of your company’s talent management function. The first is to evaluate the engagement of the executives at your company. Do they view talent management as a requirement of HR or a step in their business planning? Do they use words like “exercise” to describe the work they do associated with the people planning or do they complete the work because they recognize the impact of the company’s competitiveness? Do they wait until the last minute in order to complete aspects of their people planning process or worse, do some of them just not complete the work at all? A lack of active engagement by most of your executives suggests that you are probably a stage 1 or stage 2 company.
A second way to figure out what stage your company is at is by looking at the connection of the HR processes to the business processes. Does the work that you have to do in order to have great people seem like an extra thing that leaders have to do in order to satisfy someone else’s metric, or does it add obvious value and is it integrated into the way you plan your business? If it is integrated into the way that your company manages its business, you are likely a stage 3 or stage 4 company.
The third informal way that you can assess the maturity of your company’s talent management function is in its use of people data. Stage 1 companies don’t tend to have much in terms of people metrics and data. What they do have isn’t unified or cohesive, it tends to be data about a specific program. Stage 2 companies are more likely to have HR data, and though it can be helpful, it often is a historic report, looking back on the quality of HR’s work or the specific program rather than being a tool to strengthen the company’s competitiveness moving forward. It is stage 3 and especially stage 4 companies where the information from HR becomes valuable in the planning of the business.
For many companies, understanding what your company can do in order to make the quality of your people and culture a competitive advantage is a whole new way of thinking about talent management, culture, and people processes. Like the development of any new organizational capability, it requires a clear plan and then disciplined development of new organizational processes and habits.
The surest way to understand the maturity of your company’s talent management processes is to do a formal assessment using our tools designed to assess the strength of your talent management system. There is power in this knowledge. Getting a clear read of the strengths and weaknesses of your company’s people processes will allow you to plan and build the next generations of leaders for your company.