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Talent Management 2012 - Summary Paper

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Senior executives consistently rate talent as the key determinant of their long-term success. Without the right skills and capabilities in the right places in an organisation, companies will struggle …

Senior executives consistently rate talent as the key determinant of their long-term success. Without the right skills and capabilities in the right places in an organisation, companies will struggle to live up to their potential.

It is against this backdrop that Economist Conferences hosted The Talent Management Summit, a one-day event held on June 14th 2012, at the Hotel Russell in London. Invited speakers and high-level attendees from a variety of industries took part in a lively discussion around the challenges and opportunities of talent management, and how companies can position themselves to succeed in today's highly turbulent and fast changing world.

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  • 1. www.thetalentmanagementsummit.comThe talentmanagement summitthe next generation of leadersJune 14th 2012 • Hotel Russell, Londonsummary reportGold sponsor:
  • 2. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORTThe talentmanagement summitthe next generation of leadersINTRODUCTIONSenior executives consistently rate access to talent as the key determinant of their long-term success. Without the right skillsand capabilities in the right places in an organisation, companies will struggle to live up to their potential.The financial crisis and its aftermath have created a new set of challenges for executives tasked with recruiting, developingand retaining talented managers. Executives today must be comfortable with rapid change and near-unprecedentedcomplexity. As companies shift their emphasis to the growth markets of the world, they must ensure that they have the rightexperience and skills in place. And they must nurture and develop a new generation of professionals who have very differentneeds and expectations from the one before.It is against this backdrop that Economist Conferences hosted The Talent Management Summit, a one-day event held on June14, 2012 at the Hotel Russell in London. Invited speakers and high-level attendees from a variety of industries took part in alively discussion around the challenges and opportunities of talent management, and how companies can position themselvesto succeed in today’s highly turbulent and fast-changing world.
  • 3. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT Talent in emerging markets Major macroeconomic and environmental trends are forcing companies to rethink radically their talent management proposition. As economic power shifts to the east and south, companies must identify, develop and retain a new generation of managers and leaders from emerging markets. Recruiting managers in growth markets remains a key challenge for many companies, even though there is no shortage of potential candidates. “The challenge we have that the majority of future business growth will come from the East and South, and yet we don’t have the depth of managerial talent to serve that growth,” said one speaker.In emerging markets, we are seeing a shift from capitalism to what Karl Schwab, Head of the World Economic Forum, refersto as “talentism”. This is an era when human capital is more important than financial capital, and where skills and capabilitieswill be the driving force behind economic, political and social developments. But in emerging markets, talent gaps are impedingthis transition. “If you imagine that our organisation is a pyramid shape, then in emerging markets we have a surplus of people at the bottom of the pyramid, and there are many people outside of that pyramid who don’t have the skills to climb up the ladder. There is a surplus of unskilled talent and a deficit of talent at a senior level.”One speaker provided a neat illustration of where these gaps lie. “It used to be that we could take out our wallets and outbid forsomeone,” he explained. “Now, we take out our wallet and there is not even a person to bid for because there is not enough supply.We have to think differently if we want the skills to operate in these markets, and that requires helping communities and providinga platform for the right management capabilities to be developed. This is not a corporate social responsibility issue – it is aboutcreating a sustainable talent framework.”The challenge of creating the right skills and capabilities in emerging markets cannot be underestimated. One speaker describedhow his company is collaborating with like-minded companies and governments in regions like Africa to tap into communities andprovide benefits to them. “We are not talking about producing 100 new employees here,” he explained. “We are trying to find ways toup-skill 1000s of people. This is an opportunity for us to compete for that talent down the line. It is a long-term issue that will takemany years to address.”
  • 4. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT The importance of agilityBuilding a talent pipeline that can deal with change and complexity has become a critical capability for HR professionals and talentmanagers. Talent needs to be agile so that it can respond quickly to fast-moving trends.But as one speaker outlined, there is an inherent contradiction between the talent that companies think they need, and theapproach they take to running their business. “There is a loud and clear message that managers need to get out there and innovateor try something different,” argued the speaker. “Yet at the same time, managers are constantly told not to mess up, and keepeverything stable. This means that they default to strategic choices that are safe. We need to recognize that the world is just not likethat. It is messy and disturbing.”A willingness to tolerate failure is essential to resolve this contradiction, argued one speaker. “We believe that any failure is the company’s fault, not the individual’s. What this does is to eradicate fear. When people are not scared of losing their jobs or being reprimanded because an idea has failed, they are much more likely to try new things and take risks.”Providing an environment in which employees are willing take risks enables talented managers to rise to the top. Implementingany new idea can be difficult, because the individual must seek out the resources, convince managers and put together a cross-functional team to implement the idea, but if someone can do all of those things, then they are clearly worth watching closely.Building a workforce that is agile and thrives on change depends on moving employees around and giving them fresh challenges ona regular basis. “We need to send these individuals out to the periphery of the organisation but also ensure that they spend time inthe centre and understand how the company works,” said one speaker. “Agile leadership relies on our ability as business leaders totest individuals by giving them cultural and leadership challenges.”One speaker emphasized the importance of hiring what she called general athletes rather than experts. Although some experts,such as legal officers or accountants, will always be necessary in any organization, the danger of hiring experts is that it createssilos in the organization. “We want to hire people who have the potential to work across multiple functions,” she said. “If wehire people who have general capabilities, then we can move them around, give them broader experience and keep them happyand engaged.” But although breadth of experience is valuable, one speaker argued that flexibility was just as important. “We want managers who can work in a changing environment and adjust their leadership style to meet the needs of different markets and situations. Agile leaders are vital to be able to handle the current pace of change.” Developing an agile workforce requires companies to start thinking about the underlying traits that will facilitate these capabilities at an early stage. “It’s important to look at graduate level and the baseline capabilities and emotional maturity that will enable the company to flourish regardless of the external situation,” said one speaker. One speaker highlighted the value of “disruptive learning”, which gives individuals experiences outside of the work environment that challenge and stretch them. For example, they may spend time working with a charity, helping homeless people or working in schools. “Disruptive learning helps people to think about how they can co-create and innovate in a different way,” explained the speaker.
  • 5. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT women and talentIn recent years, companies have made considerable progress in creating an environment that enables women to reach seniorleadership positions. But as panellists explained, there is much work to do. The figures speak for themselves. There has been a bigshift at the board level in UK plc, but not yet in the executive layer beneath that. There is a big drop-off between what is started atthe top and what takes place further down.The good news is that there is no need to sell diversity – most people at a senior level in organizations understand that, to performto the best of its abilities, a company needs a diverse workforce that reflects the diversity of its client base. Academic research hasshown that there is a strong correlation between having senior women and strong performance. It is impossible to prove a causalrelationship but, as one panellist argued, it would be unwise to ignore this correlation.One key problem preventing greater progress is a lack of data. Many companies do not have sufficient information about howwomen progress in the organisation and therefore don’t know the scale or nature of the challenge. “Lots of companies can’t givedata on recruitment or different salary levels between men and women,” noted one panellist. “There is a lack of measurement andunderstanding.”Where companies are being successful, argued one panellist, is where initiatives from the top are cascaded and where realengagement takes place. These companies are very specific about what they want to achieve and they measure it at every stage totrack their progress towards those goals.Just as important as the structural changes that need to be made are the changes in mindset. There needs to be an understandingthroughout the organisation that there is value to be gained from a more diverse workforce. Values must be lived and breathed – notjust uttered by the top echelons of the company and then forgotten. “You can have the best framework in the world, but without theright mindset, there will continue to be beliefs and behaviours that hold women back from reaching senior positions,” argued onepanellist.One example of this are the assumptions that recruiters make about a female candidate. They may automatically conclude that afemale candidate will not have the time to dedicate to the role because of family commitments, for example. These assumptions,while sometimes well intentioned, need to be weeded out. “It is important to understand what biases people hold,” said onepanellist. “By holding conversations, we can identify these biases, but we need to be open and understand that they exist.”Most panellists were reluctant to support quotas for women in senior positions, although there was support for the effect that theyhave. One speaker worried that, in companies where quotas may be enforced, there would be doubts about a woman’s abilities if itwere felt that she has been placed in that position to meet a quota requirement. “There is a danger that quotas can be handled verybadly,” argued the speaker.Sponsorship programmes, in which talented women are paired up with senior business leaders as an advocate, were consideredby most panellists to be a valuable tool. There was more debate over whether networks were valuable. One panellist argued thatnetworks are a vital forum in which women can share concerns and knowledge, and build confidence. Another worried that they arenot as useful as is generally supposed, and that what is needed is sponsorship from a senior level to help open doors.Companies have made a lot of progress in creating a working environment that is more conducive to women reaching seniorpositions. Policies that allow practices such as home working help to promote diversity because, without them, some people areautomatically excluded from the workforce. But more needs to be done, including helping to allow managers to give permission tocreate a better balance.One speaker argued that companies need to start conversations early with women to find out what aspirations they have from afamily perspective. By putting women into roles where they perceive that they are making a meaningful difference early in theircareers, they are much more likely to return to work after starting a family. Companies that fail to take this into account are wastinga huge amount of resources.
  • 6. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT generation yThe generation that was born between 1980 and 2000 – so-called Generation Y – is having a profound effect on how companiesmanage, recruit and retain talent. Around the world, there are 2.3bn Generation Y – and almost 50% of the world’s population isunder the age of 27. Finding how to capitalize on this generation is one of the biggest challenges and opportunities facing globalcompanies.Generation Y managers are looking for a diverse, challenging career that will give them a range of different experiences. But as onespeaker noted, the reality of most organisations is that they cannot deliver on that promise. “Generation Y are tremendously excited by the challenges that the world faces and are willing embrace disturbance, change and some degree of person risk, but then they come into an environment that is safe and does not offer any excitement. Organisations need to become more comfortable with provoking and containing anxiety.”The rise of this generation has coincided with the emergence of digital and social media. The “net generation” are experts in thesetools – in general, they understand the implications of these technologies better than the CEOs of the organizations that they arejoining. Their adoption of these technologies gives them a profoundly different worldview from their parents. As one speaker said,Gen X may have had a penpal, but Gen Y has 100s of Facebook friends around the world.Although many speakers said that they were using social media as part of their talent management processes, many agreed thatthey were not doing enough. One tool that is widely used is LinkedIn. One speaker said that his company realised that potentialemployees wanted to read about senior leaders and about their journey and experience to their current position. They thereforeensured that senior leaders had a LinkedIn profile that potential candidates could access.Other companies said that they were using tools like Chatter, an enterprise social network tool, to share information. “We havelearned that the conversations we have are a great teaching device,” noted one panellist. “Each of us has a piece of information thatwe can contribute to a conversation and, by working collectively, we learn at a quicker rate and can apply our knowledge in differentmarkets.”Companies also need to learn how to engage Gen Y through their corporate social responsibility efforts. Most Gen Y want to work foran organisation that is having a positive impact on society. If companies are merely paying lip service to CSR, Gen Y will see throughit and be disappointed. “Candidates want to understand the values of the organisation much more than in the past,” said onespeaker. “They are more selective now.”Gen Y value skills rather than the employer. They will typically prefer learning development opportunities over salary. As onespeaker noted, the average Gen Y individual changes jobs 14 times by the time they are 35. This raises important questions over howcompanies compete to attract these individuals.One speaker argued that Gen Y brains are “wired differently” in the sense that they are better able to multi-task. This has an impacton the kind of work that will suit them and to which they will be attracted. They are likely to prefer more collaborative, project-basedwork. “Organisations will have to adjust the way they structure work or find it difficult to recruit,” argued the speaker.One way in which companies can gain a better understanding of Gen Y is through mirror boards – these are essentially boards ofexecutives, comprised of younger employees that discuss company issues. By tapping into these conversations, senior businessleaders can gain a better understanding of the needs and expectations of this generation. Some companies are also adoptingreverse mentoring, where older employees learn from younger ones – particularly around the use of social media.
  • 7. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT high-potential programmesHigh-potential schemes can be an important tool for developing the future pipeline of leadership. As a number of speakersdescribed, these can comprise a number of different strands, including coaching and mentoring, regular interaction with the boardand a highly structured career plan that provides exposure to different functions and geographies. The success of high-potential programs depends on the managers who provide the necessary sponsorship. “It’s important to put in place metrics that track the success rate of these programmes,” argued one speaker. “Managers should be rated on how many high-potentials have been retained, promoted and reached the expected level.” Giving high-potential managers exposure to senior business leaders – and business leaders exposure to talented managers – can help companies to understand more clearly what capabilities they have in the organisation. “A lot of people don’t have the opportunity to see our senior leaders,” argued one speaker. “We make sure that we expose our senior leaders to the talent in our organisation and get to see them in action. Visibility is essential.”So why do companies not do more with high-potential programmes and try to extend them? One problem is lack of funding – it issimply too expensive to extend these programmes beyond a small cadre of talented managers. Yet despite the important of high-potential programmes, one delegate argued that companies need to do more and look to the middle managers as well – the so-called“permafrost” in the organisation. “It’s important that we don’t just think about the needs of the top talent,” said the delegate.Not everyone supported the concept of high-potential programmes, however. One speaker considered it much more important toprovide an environment in which anyone can rise to the top, rather than identifying 10% and focusing only on them. “Those who areintellectually capable of rising the top will do so without the intervention of a high-potential programme,” argued the speaker. performance managementA systematic approach to performance management is vital to ensure that a company has the right leadership capabilitiesin place. One speaker described how his company carried out forced ranking on its top 100 leaders every year to make sure theyare performing and meeting their goals. This can then be used as a basis for setting goals and identifying where potential gapsmight lie. “Leadership development is the most critical thing we do. We need a structured approach to investing in authentic, purpose-driven leadership that will create future leaders to serve the organisation.”Equally, companies need to put in place processes to address weak performance. One speaker argued that his company was fairlyruthless about this and that, if a manager was scoring a 2 out of 5 on a performance scorecard, this would be serious grounds forconcern. “We’ve built a culture where this is not where you want to be,” he said. “This is not about failure, it’s just that the personmay not be right for the organisation.”
  • 8. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORTOthers preferred a more nurturing approach. One speaker described how their company ranked the top leadership but that, ratherthan finding ways of getting rid of the bottom 20%, they tried to see how they could be coached to improve their performance.“Instead of chastising poor performance, we work out how to improve it,” said the speaker. “This might mean changing their roleseveral times until we find something right for them.” balancing internal and external talent One speaker argued that talent management can be broken down into three phases: understanding the talent gaps that exist in the organisation; recruiting employees to fill those gaps; and then developing those employees so that they make a valuable contribution to the organization. The identification of talent gaps needs to be woven into the strategy process. As a company conducts its strategy review, it needs to apply an organisational readiness tool that can measure where the company is in terms of its talent, skills and culture. This should enable business leaders to understand whether or not they have the talent to achieve their ambitions. A roadmap or action plan can help to prioritise and determine what needs to be done in key areas. “These action plans need to be living documents that cover all geographies, functions and categories,” argued the speaker.Filling talent gaps will typically depend on a combination of internal development and external recruitment. One speaker pointedout that there is a greater shareholder return from talent that is developed and promoted internally than is brought in from outside.But this is not an either-or situation. Companies need to do both in order to thrive. There also needs to be a co-ordinated approachto internal development and external talent search. In many companies, these activities can be quite separate.Developing internal talent is crucial to ensure that the company has the capabilities to meet its needs. This is particularly importantwhen it comes to succession planning. When looking to recruit new senior leaders, the consensus view is that it is better to seek aninternal candidate. One speaker pointed out that 70% of the top team in his company had started at the bottom of the organisation.“You need to grow your oats,” he explained. “This means identifying people very early in their career and putting in place astructured programme to get them to the top.”The development of internal talent begins at the recruitment stage, but companies face stiff competition to bring in the mostpromising young managers. One speaker emphasised the importance of tracking perceptions of the company among the potentialworkforce. “We need to ensure that we are the number one employer in as many markets as possible. It is essential to guarantee that a career with our company is an attractive proposition.”When recruiting at a more senior level, there is a common bias towards external recruitment because companies do not appreciatethe capacity that they have in their talent pools. One speaker argued that companies need to uncover this latent talent, whichalmost certainly exists, rather than automatically defaulting to external recruitment. In addition, buying in talent can beexpensive, because it takes time for new employees to become accustomed to the culture and processes of the organisation. “Thereis a huge amount of value to be gained from building a better understanding of the existing talent pool,” he argued.Analytics can be a useful tool to help companies understand where talent lies in the organisation and what gaps exist. But to get tothis stage, companies need to put in place definitions and taxonomies of talent. This remains rare – very few companies can say thatthey have clear visibility into where top talent exists in the business.
  • 9. THE TALENT MANAGEMENT SUMMIT 2012 SUMMARY REPORT conclusionTalent development is one of the most important responsibilities of any business, and the primary determinant of its success. Asspeakers and delegates made clear throughout the day, HR and people professionals face a daunting set of challenges to ensurethat they recruit and retain the right people and put them in the right roles. With the business environment and global economychanging at an extremely rapid rate, and with organisations becoming increasingly complex, the pressure to find the right talent isgreater than ever.The demands of talent management are encouraging new approaches and tools. Analytics is emerging as a powerful way ofenabling companies to understand more about their available talent, identify gaps and manage performance. Companies are alsoexperimenting with new styles of leadership and organisational structures. Command-and-control hierarchies are increasinglyfalling out of favour and, in their place, is a model that one speaker described as “suggest and assist”.Above all, the challenges of the business environment emphasise the importance of hiring the very best people. Recruitingindividuals who are OK or who meet an immediate need without thinking of their long-term potential will not work. The costs ofhiring, training and then re-hiring when an individual leaves or does not work out can be significant. If companies can reduce thesecosts, and create a workforce that is engaged, willing to learn and comfortable with change, then they will have a much betterchance of thriving in today’s highly complex business environment.
  • 10. Economist ConferencesEconomist Conferences is a part of The Economist Group, publisher of The Economist newspaper. Sharing The Economist’s commitment to informed, im-partial and independent debate, we are recognised the world over as a leading provider of highly interactive meetings—including industry conferences,private gatherings and government roundtables—for senior executives seeking new insights into important strategic issues.Economist Conferences26 Red Lion SquareLondonWC1R 4HQTelephone +44 (0) 207 576 8000Fax +44 (0) 207 576 8472www.economistconferences.co.ukCopyright© 2012 The Economist Group. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmit-ted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of The Economist Group. Whilstevery effort has been taken to verify the accuracy of information presented at this conference, neither The Economist Group nor its affiliates can acceptany responsibility or liability for reliance by any person on this information.