Talent Management


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Talent Management

  1. 1. Talent Management Allan H. Church PepsiCo, Inc. Editor’s Note: This features describes a practitioner forum session pre- sented at the 2006 SIOP Annual Conference. The ability to attract, identify, develop, and retain key high-potential tal- ent in organizations is critically important to their ability to grow and meet their business needs. Although this has been a recognized area of focus for both line and staff leadership for decades (particularly in organizations with strong talent management functions), the popularity and usage of assessment tools and processes (e.g., formal assessment centers) has waxed and waned in the business environment over the last 50 years. Today, however, the notion of talent differentiation has once again become a significant issue for contemporary senior leaders in organizations. Between the fall of the notion of life-time employment and the exodus of talent to start-up organizations during the dot com era, the employment con- tract has forever been changed. Individuals are no longer expecting to grow and develop within the same organization throughout their careers. In fact, often the best way for advancing one’s position is by taking a higher level job somewhere else. Although this is fine for the individual, it represents a drain on the organization’s talent pool. It also makes identification, retention, and development of one’s best talent critically important. As organizations begin to wakeup to these issues, we are now seeing a resurgence of focus over the last few years on talent assessment, management, and accelerated develop- ment (Lombardo & Eichinger, 2002). For example, the last 2 years of research from the Corporate Leadership Council (CLC) have focused on high-potential talent identification and engagement, and there are now “talent management” job titles appearing in the workplace. Although I-O psychologists have often worked on elements related to tal- ent management (e.g., via assessment tools and centers, feedback and coach- ing, and leadership development programs), identifying and moving talent itself has not consistently been one of our core areas of expertise. This is often in the hands of the HR generalists and others, which is unfortunate as talent identification and development is a strategic priority and is clearly a place where I-O psychologists could be adding more value. In fact the term “talent management” was not included in the 2006 SIOP submission content list—although several sessions this year including ours focused on the sub- ject. In the end, however, if we want to be strategic partners to our clients (Ulrich, 1997), it is critical that we better understand how and where organi- zations are working with these concepts. Today, the topic of talent manage- ment is extremely popular among the broader HR community. The Industrial-Organizational Psychologist 33
  2. 2. In an effort to respond to these issues and bring greater exposure to the topic of talent management at SIOP this year, we held a practitioner forum focused on the subject in Dallas. The presenters discussed their take on talent management from several different lenses. Participants in our panel included both external I-O psychologists who are well-versed in talent assessment tools and current practices, as well as internal practitioners focused on build- ing and maintaining their own internal talent management processes. Each of the presentations and some of their key messages are described briefly below. The first presentation was given by Rodney Warrenfeltz and Scott Davies, both from Hogan Assessment Systems, entitled “Assessing Leadership Talent: Past Trends and Current Practices.” The focus here was on the evolution of various schools of thought on leadership (eight different approaches were dis- cussed—e.g., from trait to behavioral) and how this has helped shape our thinking around talent development and assessment. As they pointed out, it is interesting to reflect on the cultural and historical factors that helped shape each approach. Regardless of the model applied, however, the bottom line is that individual differences across leaders are important regardless of other components and that we have gotten better and better at identifying these char- acteristics over the years with our tools and measures. Aside from the clear influence of technology on the assessment process and the shift in power in the 1970s–1990s from academia to commercial assessment firms in I-O, they concluded that the majority of the innovation in leadership assessment occurred in the first half of the 20th century and that we have a good sense today from a formal assessment perspective of what leadership potential looks like. Rodney closed the session with some trends and observations including the pending talent drain from aging boomers and shifting workforce demo- graphics, the increasing importance and impact that technology is having on our approach to testing online, and the integration of assessment with the rise of the coaching industry as its own area of professional practice in I-O. The next presentation in the forum was delivered by Rob Silzer from HR Assessment & Development Inc. and was titled “Making a Differences in Talent Management; Who is High Potential?” Rob began his provocative presentation by sharing some interesting statistics taken from the recent CLC high-potential study (e.g., only 29% of high performers are also high potentials). He then went on to officially define talent management as “the integrated selection, develop- ment, retention and leveraging of the critical talent that is needed to achieve busi- ness strategies,” and then spent some time walking through what each of the I-O- related levers are in this area. After covering some of the typical and potentially inaccurate ways that organizations often identify and/or classify their high poten- tials (e.g., manager rating of someone’s potential to move two levels higher in an organization) and the issues inherent with these as future criterion variables (e.g., no common definition of what potential actually is or looks like, little under- standing of past success context, positive manager bias), he closed the session 34 July 2006 Volume 44 Number 1
  3. 3. with a call for action in four key areas of talent management practice in organi- zations: (a) better understand the future context requirements, (b) accurately assess current skills and past experience, (c) assess for fungible talent and growth potential, (d) improve our tools, processes and definitions. The third presentation in our session was intended to essentially blend issues raised from these first two discussions together (i.e., linking research and practice) by describing some of the applied talent management efforts cur- rently underway at PepsiCo. This presentation, titled “Bring on the High Potentials—Talent Assessment at PepsiCo,” by myself and Erica Desrosiers (also at PepsiCo), focused on an assessment pilot being conducted and the key learnings identified from the research. After briefly describing our HR strate- gy and how talent management is a key component to the firm, we then described the research and results obtained. We had essentially set out to answer the basic question that Rob posed earlier—are we sure we know what a high potential at PepsiCo looks like, and is there a way for us to spot them sooner and/or deeper in the organization? Using a cross-business sample of 286 employees (managers to VPs, mixed by gender and ethnicity), and strati- fied across our internal “talent call” categories, we gave them a suite of tools (i.e., Hogan Personality Inventory, Hogan Development Survey, Motives, Val- ues, Preferences Inventory, Hogan Critical Business Reasoning Inventory, and the Lominger Choices Measure) and some one-on-one follow-up feedback ses- sions. With the help of Scott and Rodney from Hogan Assessments, we then linked this data to successive years of 360 feedback data as well as perform- ance management ratings (on both business and people results) to see if we could predict our internal talent call from these tools. Results revealed a clear profile of a high potential at PepsiCo, and all measures were statistically sig- nificant predictors of our talent calls. Moreover, each one contributed some- thing unique to that prediction with a total multiple R of .65. We closed the presentation with some potential applications for our organization (e.g., lever- age these tools with coaching during major developmental transitions, or when onboarding strategic new hires) and some implications that were raised as a result of this work. Next we had a presentation from Michael Barriere, Amie Nelson, and Joe Ryan, all with the Citigroup Private Bank, regarding how they approach talent management for critical roles in their organization. Similar to the call to action given by Rob, Amie described their approach to identifying the most strategic and important roles to the organization from a talent management and business strategy perspective, and how they defined and then mapped competencies to each of these. The next stage in the process was to use 360 feedback to assess incumbents and determine critical role specific success fac- tors and individual development priorities. She also shared a sample of their talent development tracking template that captures in one place all of the infor- mation for strategic role incumbents, and all of their back-ups as a tracking The Industrial-Organizational Psychologist 35
  4. 4. and professional development planning tool. We also reviewed the compo- nents of their sales competency model and how it maps to the various critical roles and what that looks like at different levels. Finally she showed the out- come of their research into the two most important themes for their sales team: coaching and developing sales talent, and developing and executing strategy. The last formal presentation was from David H. Oliver at PepsiCo Interna- tional (PI), and Paige Ross with Avon Products (formerly with Pepsi-Cola North America), titled Translating Assessment Results into Development at PepsiCo. After providing some basic business context to set the stage, David presented on some key talent management challenges facing the international arena within PepsiCo, including increasing retirement eligibility of the senior leadership work- force coupled with immense growth projections particularly in certain parts of the world. He then talked about PI's approach to leveraging the assessment and devel- opment tools piloted cross-divisionally across PepsiCo (as noted above) in a more holistic and integrated manner. This approach involved linking the assessment results to a formal leadership development agenda supported by extensive follow- up coaching engagements (e.g., 6–12 months in length). Some of the issues raised by the participants that needed to be addressed included fear and anxiety regard- ing the potential use of the results for more than just development and concerns over adding more complexity above and beyond an existing set of development tools (e.g., performance management process, 360 feedback, functional compe- tency models, organizational health survey, etc.). These issues were eventually addressed by stressing the importance of self-awareness, ensuring clarity of the purpose and use of the tools, and being selective regarding to whom they were applied (e.g., a select group of high-potential talent hand picked by the CEO of the international business). In addition, he noted that integrating the assessments into a leadership development program helped soften the concerns as well. He summarized by stating in order to translate the assessment data into development they had to (a) change the mindset, (b) use a simple framework when integrating the new tools into the development agenda, and (c) the use of a cadre of external executive coaches to drive development planning and accountability. Final comments on the session were offered by Ben Dowell in his role as dis- cussant. Aside from briefly discussing each presentation, he also offered some of his own personal observations based on his many years in this area with the Bris- tol-Myers Squibb Company. And, as he mentioned, although talent management is becoming more and more popular in the general human resources area, not many traditional I-O psychologists specialize in this type of work. This is one of the primary reasons that the 2005 and 2006 SIOP fall consortia are focusing in this direction as well, and Ben is the practice co-chair of this event for SIOP this year. References Lombardo, M. M., & Eichinger, R. W. (2002). The Leadership Machine. Lominger Limited. Ulrich, D. (1997). Human resource champions: The next agenda for adding value and deliv- ering results. Boston: Harvard Business School Press. 36 July 2006 Volume 44 Number 1