Talent Management opportunities during a downturn
By Jan Kwint, Chief Operating Officer, Cubiks, www.cubiks.com
Just over a year ago, the Economist reported that Talent Management (TM) was
perceived to be one of the top three priorities for Executive Boards. Private equity and
technological developments were the other top priorities listed. In addition, a recent
McKinsey survey stated that respondents regarded finding talented people (internally
and externally) as likely to be the single most important managerial preoccupation. No
other global trend was considered anywhere near as significant.
TALENT MANAGEMENT BEFORE THE DOWNTURN
The talent issue has clearly moved up the Boardroom agenda in recent times. In the
past decade, organisations have invested heavily to implement Talent (HR) systems and
processes. What made executives decide to focus on Talent Management? Largely it
was because of perceived demographic trends and the effect of increasing globalisation.
Many Talent programs were focused on the top 20% or the A players. It was felt that
activities directed at this group would give the best return on investment. But this is the
past. Nowadays, companies can’t afford to neglect the contributions of other employees.
Several authors in recent years have rightly emphasized the valuable contributions of B
players: capable, steady performers who make up the majority of any workforce and who
“keep your business running”. These types of individual increasingly belong to the Y
Generation. Born after 1980, they expect greater flexibility, more meaningful jobs,
professional freedom, higher rewards and a better work–life balance.
Effect of globalization
As a result of increasing globalisation, talents are now spread over business units and
departments in different locations and countries. The identification of talent gets harder.
Companies claim that high potentials from Asia, South America and Eastern Europe lack
the team work attitude, educational qualifications and cultural sensitivity needed to work
internationally. However, in the not too distant future, organisations will need to be able
to draw on the skills of managers from those regions which makes it all the more
important for them to know how to identify the potential managers and leaders of the
Executives have already realised that their talent strategies cannot focus solely on the
top performers. The effects of the long term demographic trends and the effects of
globalization have already forced companies to re-think their target group for TM.
Organisations and their managers need to identify good performers early on in their
careers and start paying real attention to them.
HOW THE CURRENT DOWN TURN BECOMES A CHANGE OPPORTUNITY FOR TM
We are now all experiencing the effects of the global economic downturn. Organisations
are inevitably under pressure to generate cost savings: reducing manpower, introducing
salary freezes and cutting budgets for training, coaching and entertainment. CEOs
everywhere are having to confront these issues and make announcements that keep
analysts, shareholders and investors happy.
Costs saving measures are often used as window-dressing in harsh times. However, the
quick announcement and implementation of cost-cutting measures can cause valuable
talent to leave a company. It is not unknown for entire departments, management layers
or business units to disappear through restructuring operations. For the remaining
talents in the business units which were not affected by the measures, everything
becomes less attractive; they believe they will receive little personal attention and less
We are already seeing in the newspapers reports of organisations making widespread
redundancies and reducing the investment allocated for training and development.
Business during a down turn is very much focused on the short term with the numbers
being given priority. During such times, managers will be even less interested in the soft
aspects of their role such as coaching. Once the downturn has ended, business will
have learned lessons from the single focus on short-term revenue that brought
excessive bonuses to managers. Some say this actually led to the credit crunch. Values
and controls will change. By then, other measures like retention rate and the number of
promotions will influence the level of bonuses and - as a result - the behaviors of
managers will change.
But that could be too late. A downturn leads to an attitude of survival and people seek to
hang on the jobs that they have. When the downturn is over and the tide has turned, the
most talented and employable staff will leave the ship. Most likely, these individuals will
belong to Generation X and Y. They are simply very employable and – by nature - very
willing to change. There is already evidence that graduates of Generation Y tend to
decide to leave companies on average after 2 years of employment. What a difference
from the past, especially if you compare this to the life-long employment mentality of the
Baby Boomers and late X generation.
THE DOWNTURN NOW ACTUALLY PRESENTS US WITH A GREAT TM
During a downturn it is vital for organisations to allocate their development investment
and management attention to the real talents in their business. This is because -
remember - there is still a long term War for Talent going on out there. Your competitors
might not be sleeping. Are you giving your talented staff enough accountability, training,
personal attention, job rotation, challenging projects, etc? Above all, do you know what
makes a real talent? Are all of your talented staff on the radar map of HR?
It is a necessity and an opportunity to re-define your talent identification processes and
to find out who the real talents in your organisation are. Companies should open up their
TM processes and systems to a much wider audience of good performers in all layers of
the organisation. This will ensure access to a wider supply of talented people. By
providing individuals with this level of attention, you could also prevent them from leaving
ENLARGE YOUR TALENT POOL: TALENT IDENTIFICATION
It has been said that talent can be detected. It is recognisable. But why then is it so hard
for international organizations to identify their current talents? Is it due to the fact that
exposing individuals to the right leadership behavior is helpful, but not enough to make
talents make the transition from having potential to being a true leader? Is it because
concepts such as authenticity, intelligence, pro-activity and independence are hard to
Cubiks researched 25 international organizations to discover the criteria used for Talent
Identification. It emerged that the criteria can be divided into three groups:
Intelligence / cognitive skills
The research revealed that the most important behavioral competencies are leadership,
teamwork, vision, entrepreneurship, strategic vision, planning and communication skills.
Behavioral competencies are observable and relatively easy to measure. Personality
traits are more difficult to measure. According to the research, this is about drive,
performance management, sense of responsibility, the ambition to achieve better than
others, etc. Other important features were the ability to learn, the ability to get
acquainted easily with complex matters and the ability to break information down into
manageable and usable components. Most organizations consider ‘intelligence’ or
general mental ability to be the most consistent predictor of successful leadership.
So, it can be briefly summarised that organisations need to first outline what makes a
person successful in terms of behavioral competencies, cognitive abilities (define a
minimum level) and personality traits.
Once the criteria for the identification of these factors are in place, do we then rely on
Line Managers to assess staff based on a yearly evaluation form? The form focuses on
assessing functional behaviors in the past. Is this the best way to predict the future
behaviour of talented individuals? Many managers consider Talent Management to be
an administrative and time consuming process: focused on yearly evaluation, salary
rounds and promotions. Also, the ability to meet future competencies is rarely measured
on an evaluation form and the opinions of third parties are seldom heard. Personality
traits and related competencies are not measured despite the fact that they are good
predictors of potential.
As part of their Talent Management processes, most international organizations have
online 360 degree feedback instruments in place to measure leadership and talent
competencies. However, 360 degree tools can sometimes lack focus on the personality
elements, and are not applied widely in organisations, usually only with managers. In
addition, the results of the assessment projects are rarely benchmarked. Other TM tools
such as Development Centers are a great value-add. However, they can also be very
time and cost intensive and they are not capable of being applied to an audience wider
than those who have already been identified as top performers. It is simply not enough.
The combined effects of changing demographics and increasing globalisation are
causing organisations to widen their talent pools. During a period of economic downturn,
businesses should not impose rigorous headcount cuts or introduce cutbacks for training
and development. The War for Talent will not stop and the effect will hit employers who
have been cautious once the downturn is over. Forward thinking employers will use the
momentum of the downturn to ensure they understand what makes a talent in their
organisation. They should make specific plans to identify and to develop these
Business must ensure that they are able to quickly produce, on an annual basis, a
comprehensive and validated overview of the current and future talents (and gaps) in
their organisation. They require a TM tool that measures both behaviors and personality
and must ensure that the tool is fair, which means culturally validated, using multi-rater
input and with clear norms/benchmarks (at individual and organisational level). We all
know that the tide will turn. Let us have competitors pay the price for a lack of focused
TM activities during the down turn.