2009 Tm Dilemma During A Recession Uk Version

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How a recession can give more focus to your TM activities and make a you a winner in the War for Talent

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2009 Tm Dilemma During A Recession Uk Version

  1. 1. 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. Demographic trends 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 future. 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.
  2. 2. 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 personal development. 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 OPPORTUNITY 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?
  3. 3. 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 the company. 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 measure? Cubiks researched 25 international organizations to discover the criteria used for Talent Identification. It emerged that the criteria can be divided into three groups: Behavioral competencies Intelligence / cognitive skills Personality traits 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
  4. 4. 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. CONCLUSION 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 individuals. 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.

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