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  • 1. strategy+business The Talent Innovation Imperative from strategy+business issue 56, Autumn 2009 reprint number 09204 by DeAnne Aguirre, Laird Post, and Sylvia Ann Hewlett Reprint
  • 2. features special report 1
  • 3. Any company that competes on the global stage must, in light of today’s changing workforce, rethink the way it manages people. SPECIAL REPORT: THE TALENT OPPORTUNITY by DeAnne Aguirre, Laird Post, and Sylvia Ann Hewlett Too many companies are wasting their resources 2 Imperative The Talent Innovation features special report experienced, globally minded visionaries that they need — their people and their financial leverage — by per- at every level. petuating outdated approaches to talent management. It’s not that talent is unimportant to corporate lead- They structure jobs rigidly, forcing many people to work ers. Many of them see that people are the only asset that a 9 A.M. to 5 P.M., Monday through Friday, workweek. innovates, and that innovation is the only path to sus- They focus their training on functional skills, not on tained breakthrough performance. As these leaders read aligning employees’ capabilities with the strategic objec- about companies such as Google and Patagonia that are tives of the business. For leadership development and known for their creative and attractive work environ- career advancement, they rely on long-standing training ments, they would like to provide the same. And they Illustration by Noma Bar courses that don’t reflect the contributions that people know, from these examples and others, that the invest- can make in today’s flat, flexible, and entrepreneurial ment needed to improve is relatively small, and the pay- organizations. And their compensation systems do not backs are relatively high. adequately link to performance or hold managers But they are held back by an old model of talent accountable for developing the talent of their staff and management. This model, which is so pervasive it is their direct reports. In short, the talent management in almost unseen, is grounded in 20th-century assump- these companies is not arming them with the decisive, tions about people and the workplace. It hasn’t adapted
  • 4. DeAnne Aguirre Laird Post Sylvia Ann Hewlett This article draws on research (deanne.aguirre@booz.com) is (laird.post@booz.com) is a (sylvia.hewlett@ne.booz.com) is and practice developed a senior partner with Booz & principal with Booz & the CEO of Sylvia Ann Hewlett through Global Talent Company based in San Company based in San Associates and the founding Innovation, a joint service Francisco. She is an expert in Francisco. He advises organi- president of the Center for offering from Booz & Company organizational and talent zations in the U.S. and globally Work–Life Policy, a think tank and the Center for Work–Life effectiveness and change on people, leadership, and based in New York. She is the Policy (CWLP). Also contribut- leadership, and has led change effectiveness. author of Top Talent: Keeping ing were, from Booz & transformations in both U.S. Company, Principal Ilona and global corporations. Business Is Down (Harvard Steffen and Associates Emily Business Press, 2009) and Kao and Claudia Onofrio; from eight other books. CWLP, Vice President Ripa Rashid; and s+b contributing editor Sally Helgesen. Toward a New Talent Model Performance Up When 3 to demographic changes, to shifting attitudes among to chart — using the experiences of many companies employees (knowledge workers in particular), or to the before and after the recession began, as well as research features special report new priorities of global corporations. It needs to be conducted by Booz & Company and the CWLP — the changed, and the needed reform will come about only parameters of an effective approach to global talent through deliberate changes in policies and practices. innovation. As we’ll see, this approach has four main To be sure, many executives are prone to postpon- priorities: differentiated capabilities, performance accel- ing talent management innovation in the wake of the eration, leadership development, and the fostering of a global economic crisis. Employees are so grateful to have talent culture. their jobs, the thinking goes, that they can be relied on to deliver 100 percent. But the crisis has added urgency to the talent problem; the commitment of employees is The economic crisis has created a complex challenge for most needed in a crunch, and that commitment is all corporate leaders with respect to talent. They must stem too easy to lose. Surveys conducted by the Center for the leakage of the highest-quality people even as they Work–Life Policy (CWLP) show that between June reduce overhead. They must reinspire employees and 2007 and December 2008, the number of employees reinvigorate morale. Most urgently, they must realign expressing loyalty to employers plunged from 95 percent the company’s talent practices with its strategic priorities to 39 percent. The number trusting their employers fell — which, in many cases, the recession will have forced just as dramatically, from 79 percent to 22 percent over them to refocus. And they must revamp their talent the same time period. Surveys in mid-2009 continued model to reflect changing demographic trends; as com- to report similar disenchantment and mistrust. Another panies begin to recruit and train people again, they will recent study, published in the Academy of Management find a very different talent pool than they have had in Journal, found that after a round of layoffs, voluntary the past. attrition spikes by as much as 31 percent, and precisely Demographers have long foreseen dramatic shifts the wrong people — those who have the strongest track that would affect the makeup, location, preparedness, records and brightest employment prospects even in a and expectations of every company’s workforce. Now recession — are most likely to leave. Companies that those trends are here, and many companies are unpre- react to the crisis with across-the-board talent cuts are pared. Combined with the economic downturn, these not just missing an opportunity to compete; they’re shifts have created a perfect storm of workforce pressures making themselves weaker. on companies around the world. strategy + business issue 56 By contrast, some companies have been steadily One shift involves the growing numbers of Chinese innovating their talent models, and the results are show- and Indian people in the global talent marketplace; ing up in breakthrough performance, superior competi- another is the expanding achievement gap between tive advantage, and significantly enhanced global reach. women and men. In many countries, more women than No single company has all the answers, but it is possible men graduate from colleges and universities, and
  • 5. Between June 2007 and December 2008, the number of employees expressing loyalty to employers plunged from 95 percent to 39 percent. Exhibit 1: The Nonwhite, Non-male, Global Talent Pool 4 Individuals with College/University Education Of individuals with a tertiary education (a college or university degree), only 17 percent are white men (left), and only 22 percent come from western Europe or North America. By Demographics By Region women, barely present on corporate payrolls 30 years cannot simply passively bring women and people of Middle East/North Africa 4% ago, now make up more than half of the global educat- color into the workplace; they must prepare them for features special report ed workforce. White men now make up less than 20 greater positions of responsibility. White Africa 2% Men China percent of the “tertiary” educated population (defined as One company directly addressing this challenge is South America 5% those with a college or university degree), from which Johnson & Johnson (J&J), which has identified high- 17% 21% most corporate employees are drawn, and potential performing women of color as a pivotal group and suc- North America 12% Asia/ managers from North America and western Europe are cessfully piloted an initiative aimed at accelerating their India Pacific Western Europe 10% outnumbered more than three-to-one by their counter- career development. Called Crossing the Finish Line, Women and Nonwhite 14% parts from the rest of the world. (See Exhibit 1.) As a this program for director-level women of color and their 54% Employees Central/ Rest of result, leading companies are already finding that they direct supervisors consists of a four-day session: two and Eastern Europe 13% Asia/Pacific 83% 19% Note: Figures represent tertiary completion levels with the exception of India, Pakistan, and Peru, whose figures are derived from tertiary enrollment, assuming a 33 percent completion rate. Source: Sylvia Ann Hewlett et al., “The Athena Factor: Reversing the Brain Drain in Science, Engineering, and Technology,” Harvard Business Review Research Report no. 10094, http://BrainDrain.hbr.org; Center for Work–Life Policy; Booz & Company analysis; UNESCO/OECD/EUROSTAT Online Education Database (2000–06)
  • 6. The GLOW Network at Siemens by Peter Löscher and Jill Lee On March 19, 2009, Siemens AG contact every day. We experience the example, currently only slightly more launched the Global Leadership benefits of diversity again and again. than one-third of our top management Organization of Women (GLOW), a net- For example, Japanese, Chinese, or is non-German and only 7 percent work dedicated to enlarging the con- Arab customers prefer to talk to us in are women. tribution of women to our business. their own language. If decision mak- Our diversity initiative reflects the The launch event, held in Munich, ers in our company speak that lan- commitments and beliefs of senior drew the 100 most senior women from guage, it gives us a real competitive executives and the management across the company and from all parts advantage. board, and it has the highest priority of the world. It marked the first step Having a diverse group of senior within the company. However, we are in the rollout of an ambitious change leaders in place will help us all de- not using diversity to “rainbow wash” agenda that encompasses mentoring, velop a better understanding of the company, nor are we interested in establishing flexible working condi- customer needs. The potential for establishing rigid quotas for gender, tions, on- and off-ramping for pa- networking is enormous: Innovative nationality, and ethnicity. Rather, we rental leave, and developing ways ideas can be channeled back to our want to unleash the enormous poten- to expand the external visibility of R&D centers in Germany or used in tial of our employees — their cultural women in the company. different parts of the world. Take, for and personal backgrounds, their We created GLOW because we want example, the entry-level CT scan broad range of experience, their spe- to proactively recruit and retain highly device called the Somatom Spirit. It cial skills — for their benefit and for qualified women. We believe this will was originally designed, engineered, the benefit of the company. We know greatly enhance our talent pool. and manufactured in China exclusive- that diverse teams are more creative Throughout the world, women deliver ly for Chinese hospitals. But because and that creativity drives innovation. outstanding academic and profes- our teams are increasingly global, we And innovation has been our lifeblood sional performance, and they repre- soon realized that this product has for 162 years. All of us at Siemens sent an important resource for com- potential outside China, as well. It’s benefit if every employee can fully live panies. Against the backdrop of ideally suited for community hospitals up to her or his potential. demographic change and globaliza- in the United States that can’t afford tion, companies cannot afford to leave more expensive high-end models. this resource untapped. Today, 75 percent of the Somatom GLOW is not an isolated initiative. It Spirits are sold outside China. Peter Löscher is part of the ongoing development of Approximately 80 percent of 5 our corporate culture. In the future, Siemens’s revenues are generated we want our management to reflect outside Germany; we operate in 190 the diversity of our customers. This is countries. Yet the representation of the only way we can satisfy the needs women and many nationalities, ethnic Jill Lee and requirements of more than 2 mil- groups, and cultures within our man- lion customers, with whom we are in agement ranks could be stronger. For features special report (editors@strategy-business.com) is the president and chief executive officer of Siemens AG. (editors@strategy-business.com) is the chief diversity officer at Siemens and the director of the GLOW network. a half days for the high-potential women, and one and a since been expanded to include men of color. half days for their (mostly male) supervisors. The two “This program helps us capitalize on talent that is groups overlap for half a day in the middle, during reflective of the global environment and different from which the women share what they have learned, their the traditional mold,” says JoAnn Heffernan Heisen, strategy + business issue 56 supervisors respond, and together they create action chief diversity officer of J&J. Companies are similarly plans for career acceleration — which are rolled out adapting to generational shifts, which vary by region. In upon completion of the program. Company data shows the mature economies of Europe, Japan, and North that women who participate in the program are more America, the “demographic bulge” of the baby boom likely to get promoted than those who do not. It has generation (born between 1946 and 1964, currently
  • 7. Exhibit 2: Population Age versus Economic Growth Nearly all the countries with populations whose average age is decreasing (the upper two quadrants) have above-average economic growth. These countries are likely to be strong sources of global talent in the future, depending on how well they educate and deploy their people. 40% Percent Change in North America Working-Age Coefficient Western Europe 2000–50 Central/Eastern Europe ages 45 to 63) is beginning to move out of the work- shrinking pipeline of young workers. All these countries 30% Asia/Pacific force. The swelling ranks of retirees, low birth rates (par- need better-educated entry-level talent to sustain strong Central/South America ticularly among the college educated), and caps on growth. (See Exhibit 2.) Middle East/North Africa Pakistan 20% immigration are all factors that will fuel a reduction of Within global companies, three generations coexist Sub-Saharan Africa Nigeria between 20 and 40 percent in the working-age popula- in the workforce, each with a distinct demographic pro- Ghana World Avg. 6 South Africa Philippines tion over the next few decades. Meanwhile, in transi- file. Baby boomers expect to retire later than previous 2.5% 10% Saudi Arabia Egypt tional economies such as China, India, Brazil, and generations did (on average, four years later), because of Mexico Morocco Russia, talent markets vary widely. India benefits from increased life expectancies and decreased savings, espe- U.S. Jordan 0 both high GDP growth and a young, highly skilled cially after the global recession. The baby boomers are U.K. Malaysia workforce, whereas China and Russia both confront a followed by a much smaller cohort: Generation X (born Belgium Argentina Philippines France Turkey India Iran –10% Vietnam features special report Indonesia Denmark Luxembourg Sweden Costa RIca United Arab Emirates –20% Germany Finland Brazil Chile Sri Lanka Italy Australia Thailand New Zealand Romania China –30% Russia Hungary Poland Latvia Slovakia Estonia –40% Japan Spain Switzerland Canada South Korea Netherlands Real GDP 10-Year CAGR (2000–10) Czech Republic Austria Slovenia Hong Kong Singapore 0 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Note: The working-age coefficient change is the ratio of working-age population (20 to 60 years old) to total population between 2000 and 2050. Source: U.S. Census Bureau International Data Base (December 2008), IHS Global Insight Inc. (February 2009), Booz & Company analysis
  • 8. 7 between 1965 and 1978, currently ages 31 to 44). face-to-face interaction, and get only one chance to Members of this group, who would ordinarily represent enter a fast-track progression, generally in their 30s. features special report the corporate bench strength for leadership, are in short From there, work obligations override all other personal supply and, at the same time, are finished with “paying interests and priorities, including family. their dues” and ready to step into leadership positions. A more appropriate, 21st-century talent model Finally, the millennial generation, also known as assumes a workforce that is global, diverse, and gender- Generation Y (born between 1979 and 1994, currently balanced, with discontinuous career progressions, in ages 15 to 30) is entering the workforce. This generation which high-potential employees may take time off or outnumbers even the baby boomers; by 2025 it will work for different types of organizations along the way. make up 60 to 75 percent of the global workforce. Under this model, companies value functional and lead- Members of Generation Y are drawn to companies ership skills, embrace new employment structures (such that demonstrate social responsibility and offer service- as highly responsible part-time work), encourage virtual oriented sabbaticals and eco-friendly workplaces. workplaces (in which people work together across long All three cohorts have made clear their desire for distances, communicating electronically), and offer greater flexibility. They no longer want (or have given up nonmonetary rewards alongside financial rewards as hope of finding) the “organization man” model of life- a way to attract people. Family, community, and work time employment and rigid hierarchies. They are inter- are intertwined in a variety of ways, and the result is ested in striking “talent deals” with their employers to a more flexible, dynamic, and unpredictable workplace balance their work obligations and private lives. They in which people feel they are continually building their thus seek modularized work arrangements such as sea- skills and learning from the enterprise. sonal leave and flexible time. But they also expect to be This new talent management model allows a much part of high-impact teams that generate meaningful and broader group of people to assume positions of respon- valued results — within their companies and, if possible, sibility. It promotes innovation, growth, and break- in the world at large. through performance by integrating the needs of the By contrast, the old prevailing talent model, still in business with those of individuals. And when aligned place at many companies, assumes lockstep career pro- with a clear and focused corporate strategy, it allows top gression for high-potential people (whose ranks are still management to optimize compensation, training, and quietly filled mostly by white men from North America other expenses; maximize the productivity and perfor- or Europe). In these companies, it is assumed that mance of the workforce; and gain competitive advantage. strategy + business issue 56 people are motivated primarily by money and that the But it takes a CEO to put such a model in place. environment within the company should be stable and The highest-performing organizations don’t leave talent predictable. Employees are expected to move in linear performance acceleration to HR alone; they make lead- fashion up the ladder of a vertical function or business ers at all levels directly accountable for improving the line. They are mentored through, and learn through, capability and performance of their people. HR provides
  • 9. The highest-performing organizations don’t leave talent to HR alone. They make leaders at all levels directly responsible for improving the capability and performance of their people. Differentiated Capabilities • Understand and prioritize the critical capabilities required for competitive advantage. Companies should Exhibit 3: The Integrated Building Blocks of Global Talent Innovation 8 the necessary tools and program support; leaders might include the ability to dramatically shorten time- oversee the process and determine the outcomes. Chief to-market for cutting-edge designs, whereas those of a Differentiated Performance features special report executives need to declare talent a priority, and to lead high-tech company might include best-in-class product Capabilities Acceleration Talent processes identify capability gaps, which are then change in the four building blocks of global talent inno- customization. A capability is not the same as a func- addressed by relevant development programs vation: differentiated capabilities, performance accelera- tional capacity, such as forecasting, inventory planning, Lea tion, leadership development, and a talent culture. (See or R&D. It’s cross-functional, conceivably extending d buil ers fo and Leaders are ding cus i ng a rn Exhibit 3.) from manufacturing to marketing to finance, and across The cultural and on n le selected, deli o environment veri sed ge evaluated, and multiple regions and lines of business. ng ... focu anta promotes a diverse acy ive adv compensated on ri tocr etit People are the key to differentiated capabilities. To workforce, the basis of f me comp leveraging its re o ld business-aligned ultu to bui the Business success relies heavily on establishing the right create and sustain such capabilities at a world-class level, capabilities to a c ent by t capabi competencies rce build competitive info provem he b li usin ties re and rigorous capabilities — an interconnected set of systems, tools, companies need to take the following steps: s re im advantage sse s ess quir performance oce tinuou pr n ed processes, and knowledge that can be put in place to Ta lent co requirements reach the most critical groups of customers. The differ- Leadership Talent Culture Development entiated capabilities that distinguish each company from conduct an executive review of their business strategy Leaders are accountable for developing talent and attracting its competitors vary widely among and within indus- and capability requirements. Then they should take high-performing employees tries. The differentiated capabilities of a fashion retailer inventory of their current skills, profiles, performance, Source: Booz & Company
  • 10. When Pfizer partnered with Grameen Health in Bangladesh to improve access to health care through rural clinics, many employees offered to volunteer after hours or on weekends. • Identify key talent segments. Most employees will 9 • Develop tailored value propositions. To attract and Performance Acceleration and potential, identifying the high-priority gaps and propositions will vary by company; the factors that developing talent strategies to close them. motivate a pivotal employee in the pharmaceutical features special report industry might be very different from those that are rel- fall into one of four general categories, based on their evant to his or her counterpart in high tech. ability to provide the needed capabilities: (1) Pivotal Late in 2008, pharmaceutical giant Pfizer Inc. employees, those with specialized skills, knowledge, and sought to engage employees by launching the Global abilities that contribute directly to fulfilling a company’s Access initiative, partnering with Grameen Health (an strategic objectives, are the most crucial group. In a affiliate of Grameen Bank) in Bangladesh to improve consumer products company, for example, this group access to health care through rural clinics. As soon as the might include product development managers and mar- initiative was announced, project leader Ponni Subbiah • Reinforce meritocratic pay and promotion deci- keting directors. (2) Core employees are people critical was swamped with expressions of interest. “Employees sions. Recognize and reward merit rather than medioc- to executing the strategy. (3) Support employees are peo- wrote to me from all functional divisions within Pfizer ple whose value is real but whose duties could be deliv- — research, marketing, manufacturing, operations, ered through alternative means, including outsourcing. auditing — telling me how happy they were to see Pfizer (4) Noncore segments are those with easy-to-duplicate involved in this area and how it made them proud to be skills that do not serve capability requirements. Compa- part of this company,” he says. Employees were so eager nies that segment the workforce in this way can more to contribute that many offered to volunteer after work- easily see how to tailor talent strategies and allocate tal- ing hours or on weekends. ent investments more effectively. hold the best people from all three of the most-desired Organizational success hinges on the collective daily cohorts — the pivotal, core, and support employees — decisions and actions of hundreds, perhaps thousands, companies need new and diverse attraction and reten- of individual employees. The ability to engage and moti- tion drivers: competitive compensation and benefits vate them is the essence of performance acceleration. packages, innovative job designs, flexible schedules, Accelerated performance is shaped by the company’s well-crafted career development opportunities, strong assessment and feedback processes, compensation and leadership and succession planning practices, a distinc- incentive structures, and development and advancement tive culture, and a welcoming work environment. Tai- models. To rethink and redesign these elements, which lored value propositions might include socially oriented have traditionally been in the domain of the human strategy + business issue 56 initiatives that deliberately engage the passion and resources department, the following steps are needed. potential of Gen Y, or “off-ramp and on-ramp” career paths that allow highly qualified women to take time off for family obligations without sidelining their opportu- rity. Set up well-defined competencies and standards, so nities for promotion and greater responsibility. These that individuals who excel when measured against them
  • 11. • Evolve the executive leadership competencies model. Most organizations have established fairly 10 are consistently developed, promoted, and compensated 10 years. Some traditional leadership characteristics, • Measure outcomes. Companies can’t accelerate • Promote and develop people who match those accordingly. Align the performance acceleration process such as a strong sense of vision and the ability to inspire competencies. Even when they profess to support broad features special report with career planning and learning and development, so others, are still important. But leaders today must first that employee capabilities and outcomes are continu- and foremost be able to master enormous complexity. ously improved. They must appreciate and accommodate different per- The health-care products company Novartis AG spectives and interpersonal dynamics, integrate multiple tracks 14,000 high-potential individuals through its disciplines, work across cultures, and interpret diverse Organization and Talent Review (OTR) system, which and multiple streams of information. Leadership Development rates each person’s potential, learning agility, people Too few leaders have the right combination of skills skills, and ability to drive results and change. The OTR and experiences. Companies that want to improve their • Build the leadership bench. Senior management, system enables business leaders to assess individuals on a leadership development practices should take the fol- company-wide basis, illuminates gaps in skills and expe- lowing steps. rience, and provides a list of qualified internal candi- dates for every critical position in the company. Where bench strength is lacking, the generalizability of OTR narrow and nondifferentiated checklists of executive benchmarks makes it easier to identify individuals from competence. A broader set of leadership competencies, the outside who might be recruited. (For some jobs, taking into account the goals of the enterprise and the where specialized scientific expertise is required, only 20 capabilities of the individuals, makes it easier to cultivate people in the world may be qualified.) This rigorous and senior leaders who can both navigate fast-breaking crises forward-looking system helps Novartis maintain a dis- and serve the longer-term best interests of shareholders, tinct competitive edge. boards, and employees. what they don’t measure. Capture performance through well-targeted metrics based on relevant results rather leadership, many companies continue to select leaders than activities (for example, tracking the percentage of almost solely on the basis of technical and professional people “ready now” to succeed their bosses, rather than capability. Executives should stop moving people to the number of people trained). Other useful measures the senior ranks of an organization simply because they might be promotion rates, retention statistics for top hit revenue or other financial performance targets; they performers versus average performers, and performance should instead take into account such factors as the per- rating distributions by gender or ethnicity. formance of those candidates’ direct reports. including the CEO, needs to help conceptualize, craft, The qualities and requirements that define a world-class and deliver leadership programs. These should be care- senior executive have evolved significantly over the last fully integrated with the business strategy and grounded
  • 12. Executives should stop moving people to the senior ranks simply because they hit financial targets. Instead, take into account the performance of their direct reports. 11 Talent Culture in a business case. High-potential leaders should receive are far more productive and committed. They are more a variety of developmental experiences: general manage- likely to make progress toward company goals, as well as features special report ment experience, cross-functional opportunities, global the goals of their own group. But only one in four assignments, and opportunities to manage change and employees, on average, is “engaged.” Although the driv- develop other talent themselves. ers of engagement vary from one organization to the At the global bank HSBC Holdings, HSBC Chief next, four factors predominate: (1) whether employees Executive Michael Geoghegan holds his group manage- feel respected, valued, and recognized; (2) whether they ment board accountable for leadership development; perceive their job to be important to the success of the • Rethink organizational and career designs. Com- each member oversees the talent pools of a region, cus- enterprise; (3) how much pride they feel about the com- tomer group, or product line. Business unit leaders col- pany and what it stands for; and (4) how much trust and laborate with local human resources coordinators to confidence they have in company leadership. Improving • Build engagement. More than 100 studies have identify and assess promising candidates from local tal- these factors can represent a substantial and cost- ent pools. High performers are given new assignments effective opportunity for forward-looking companies. • Enhance the talent brand. Critical to attracting in their region or line of business; they then cross A good place to start is with more direct communi- boundaries to take on new positions in other functions cation from the top. In any turbulent period, when or business areas. The local managers recommend indi- leaders don’t provide accurate and timely information, viduals for the corporate talent pool, which is overseen people start to assume the worst. Time Warner Inc. centrally. These individuals are expected to work in at broke this pattern as part of its response to the economic least two very different cultural environments before crisis of 2008. The company organized a series of “skip- ascending to the highest levels of management, and this level” lunches where CEO Jeff Bewkes hosted groups expectation is clearly communicated. of high-potential employees several layers down in the organization. The targeted employees were high per- formers, and although they did not have regular access A talent culture is made up of the values, beliefs, behav- to top leadership, they were network “connectors” (peo- iors, and environment required to attract, engage, and ple who communicated directly with many others) and retain committed and competent employees. Com- “influencers” (people whom others turned to for advice panies that develop this type of culture as a key element and clarity). Both the employees and the CEO stressed of their corporate brand consistently outperform com- the value of the lunches. panies that do not. Great cultures are not created by strategy + business issue 56 accident; they are the result of specific and deliberate panies should develop talent models with 21st-century practices and strategies, beginning with the following: assumptions built in: tailored to their organization, with greater variation in roles, more efficient training, and demonstrated the correlation between employee engage- more flexible career advancement opportunities. ment and business performance. Engaged employees
  • 13. talent advantage on a global scale. + Resources Reprint No. 09304 and retaining pivotal talent is a company’s ability to approach, companies can move beyond the best prac- build (and protect) a differentiated employer brand to tices of their competitors to best-in-class innovation and present to prospective employees, recruiters, customers, performance. And that, in turn, will pay off in sustained and others. If a company doesn’t do this well, it will be noted on Internet sites where employees and high- 12 potential recruits share their impressions. The com- pany’s culture should thus be visible to the outside; the brand should reflect and embrace the values of the com- Tony Avirgan, “Economies of Major Developed Countries Will Shrink in 2009,” Economic Policy Institute, February 18, 2009, www.epi.org/ pany, emphasize its focus on talent, and differentiate it economic_snapshots/entry/snapshots_20090218/: Links demographic from its competitors. shifts to loss of economic potential. The Road Ahead Cisco Systems Inc. has deliberately built a talent Shumeet Banerji, Paul Leinwand, and Cesare Mainardi, Cut Costs and features special report brand based on innovation through collaboration. For Grow Stronger (Harvard Business School Press, 2009), www.booz.com/ example, it has set up a series of action learning forums. ccgs: Introduces a capability-based approach to shrinking expense while building a right to win in key markets. In each, a 10-person team, with members recruited Sylvia Ann Hewlett, Top Talent: Keeping Performance Up When Business Is across every conceivable line — rank, function, genera- Down (Harvard Business Press, 2009): Spells out critical changes needed tion, geography, and gender — works together for three in attracting, holding, and building new structures for high-performing months with the assistance of a coach to further one of and high-potential employees. the company’s top strategic priorities. Venture capital Sylvia Ann Hewlett, Laura Sherbin, and Karen Sumberg, “How Gen Y and Boomers Will Reshape Your Agenda,” Harvard Business Review, July prize money is awarded to winning teams, guaranteeing 2009: Guide to the “remarkably similar” intentions and demands of these that the best business plans are funded and will get off two cohorts, and the implications for talent management. the ground. Per-Ola Karlsson and Gary L. Neilson, “CEO Succession 2008: Stability An immense amount of new value creation has in the Storm,” s+b, Summer 2009, www.strategy-business.com/press/ been generated by these action learning forums. One article/09206: Booz & Company annual CEO succession study suggests that corporate leaders need to do much more to foster the next generation idea, a set of network-based standards, protocols, and of highest-level executives. technologies for the nation’s emerging smart grid electric Edward E. Lawler III, “The Talent Lie,” s+b, Summer 2008, power generation infrastructure, is expected to deliver www.strategy-business.com/press/article/08204; Talent: Making People billions of dollars to Cisco over the next five years. Your Competitive Advantage (Jossey-Bass, 2008): Two resources describing how “few organizations seem to walk their executives’ talk when it comes Additionally, 20 percent of those who participated in to the management of talent.” these teams have been promoted, and only 2 percent of Cesare Mainardi, Paul Leinwand, and Steffen Lauster, “How to Win by these high-potential employees have left the company. Changing the Game,” s+b, Winter 2008, www.strategy-business.com/ The forums are a powerful and defining element of press/article/08401: How to invest in a capabilities-driven strategy, with some discussion of talent approaches. Cisco’s talent culture. Richard Rawlinson, Walter McFarland, and Laird Post, “A Talent for Talent,” s+b, Autumn 2008, www.strategy-business.com/press/ article/08301; Theodore Kinni, Ilona Steffen, and Brenda Worthen, edi- Crafting an effective approach to talent management is tors, Capturing the People Advantage: Thought Leaders on Human Capital (s+b Books, 2008), www.strategy-business.com/hcreader: Interviews with as challenging and complex as any other C-suite man- leaders in the human resources function and others who have developed date. The global talent innovation model described here many aspects of talent innovation in their companies. can move companies beyond cookie-cutter best practices Center for Work–Life Policy Web site, www.worklifepolicy.org: Access and standard tool kits. Each building block — differen- point to the center’s work on “on-ramps and off-ramps”; reversing the tiated capabilities, performance acceleration, leadership brain drain for women in science, engineering, and technology; and other talent- and diversity-related issues. development, and talent culture — is essential. All four For more business thought leadership, sign up for s+b’s RSS feeds at elements work in concert within the context of an orga- www.strategy-business.com/rss. nization’s business strategy. Following this systematic
  • 14. strategy+business magazine is published by Booz & Company Inc. To subscribe, visit www.strategy-business.com or call 1-877-829-9108. For more information about Booz & Company, visit www.booz.com Looking Booz & Company Inc. © 2009 for Booz Allen Hamilton? It can be found at at www.boozallen.com