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Great Organizations | Great Leaders

Helping Your CEO Understand Talent Management

Here’s what we would say to those CEOs who could use some guidance.
Helping Your CEO Understand Talent Management

No one better understands the importance of talent to an organization than the CEO. But some CEOs, stretched thin by the grueling day-to-day demands of running the business, can underestimate the time, commitment, and personal involvement required for talent management.

Of course, many CEOs do get it. One chief executive we spoke with took offense at the suggestion that CEOs can neglect their talent. Then again, he is an exemplary talent champion known for writing personal notes to employees and scheduling monthly dinners with his organization’s rising leaders.

When it comes to talent management, CEOs can benefit from the expertise that HR can bring to the table. But what guidance do busy chief executives need most?

We know what we would say to those CEOs who come up short in their understanding of talent management and in the critical roles they must play to drive talent management success. What follows are some hard truths (and helpful advice) that we believe many CEOs could benefit from hearing.

“Talent strategy doesn’t automatically support business goals.”

No CEO would disagree that his or her organization’s leadership needs are informed by its business strategy and execution plan, including measures of success. Yet, most companies’ strategic business plans don’t incorporate an aligned strategic talent plan. This amounts to not thinking through how the business strategy will be executed. You may have the positioning, the capital, and the processes to accomplish the business outcomes you desire, but without the needed quantity and quality of talent, execution simply won’t happen. This is especially important as organizations have, in recent years, had to switch gears rapidly, abandoning one strategic path (e.g., aggressive growth, market expansion, acquisition) for another (e.g., long-term cost containment, innovation).

To ensure your business and talent strategy complement each other, start with the end in mind by answering some critical questions: Based on your business strategy, what future challenges will leaders likely need to address? What kind of leaders do you need and how many? What knowledge, experience, skills, and personal attributes will be critical to their success?

“Talent management isn’t (just) succession planning.”

Many CEOs can claim that their companies have a talent management strategy when, in fact, what they have is a contingency plan for replacing those occupying the top slots. Of course, succession planning is a critical component of any talent strategy, but the two are not synonymous.

Companies that are serious about talent management look across all levels and functions—they don’t just limit their time and finite resources to succession management.

Their approach is defined by three key distinctions:

1. They balance the focus on “critical” positions and key players with broader strategies to support leadership transitions at every level—from individual contributor to leader, to leader of leaders, and so on. In effect, they segment their talent base.

2.  Their energy is directed at building a “pipeline” of a ready supply of leaders rather than matching individuals with a specific future role. Companies that do this well designate “talent pools” of those whose growth they want to accelerate and whose members are the subject of differential development focus.

3.  They are careful not to treat all roles alike. They plan for the future security of “business critical” roles— those roles identified as adding unique value, which may be hard to fill, and where the variability of performance has the strongest consequences.

If there is one rule of thumb that should guide your talent management efforts, it’s this: Your talent pipeline is only as strong as its weakest link. While there’s no denying the importance of succession management, successful organizations need effective leaders at all levels and in all functional areas. Focusing exclusively on succession management at the top precludes this crucial whole-organization focus on talent management and amounts to choking off the upward flow of your talent pipeline.

“Potential isn’t everything.”

One of the biggest overarching mistakes we see CEOs and their organizations make is confusing performance, potential, and readiness. It’s important to understand that each has a distinct definition:

  • Performance is how one is performing now in one’s current role.
  • Potential is one’s likelihood of leadership growth.
  • Readiness is one’s fit with a specific role, job, or job family.

Confusing these three concepts can lead to disastrous decisions about talent. Those who perform effectively in one job won’t necessarily succeed in a job at the next level. Those with potential need to be developed. And even those who have been identified as having potential and have benefited from development may still not be ready to take on a challenging role or job.

When looking to identify those with leadership potential, it’s not current performance that matters (though current performance must be the starting point for identifying potential) as much as what sort of leader an individual is capable of growing into in the future.

“Your eye for talent isn’t that good.”

We encounter many CEOs who are supremely confident in their ability to spot talent. Still, more are beginning to understand that their eye for talent isn’t necessarily as sharp as they once thought. Especially when it comes to making selection, development, and deployment decisions that have huge, long-term ramifications.

This isn’t about any CEO's ability to “judge” people. It’s that as organizations grow more complex and more global, CEOs simply don’t get as many opportunities to work with and get to know people as they once did. And those fewer opportunities provide misleading evidence at best. For instance, see a mid-level leader make a dynamite presentation, and you might conclude that she should be tabbed for a senior job in one of your business units. The truth may be not that she’s a leader with exceptional potential, but that she’s a gifted presenter.

Through its systematic approach, talent management is all about preventing those mistakes. An integral part of that approach is relying upon assessment to gather the data required to make accurate talent decisions.

There is tremendous value in assessment, as it provides the objective data needed to understand current talent capability and gaps. This is why many highly effective organizations assess for both potential and readiness to inform promotion and placement decisions.

Plus, it’s far more effective than relying on being able to “spot” those who are ready for key jobs right now or those who can be developed to step into those jobs in the future.

“All leaders should be responsible for developing their people—and they need the skills to do so.”

Do you think that all of your leaders are “talent advocates”? After all, that’s what’s expected of them, right? Think again.

Our data on more than 1,000 senior leaders show that developing and championing talent are two of leaders’ weakest areas. In fact, the reality is that many mid-level and senior managers struggle with the idea of development as being anything but remedial. They may have bypassed key career transitions, which have left important leadership skill deficits, yet fail to prioritize—or even dismiss—training opportunities. Leaders like this tend to focus on correcting “weaknesses” rather than capitalizing on each person’s unique talents. It has been said that these leaders are successful despite, and not because of, their deficient skills.

But if every people leader has the skills to scout for “high potentials,” has meaningful performance discussions and coaches for success, builds creative development plans and makes effective hiring/promotion decisions, then talent management processes will have momentum of their own. For this, managers need enlightened role models—beginning at the top. Beginning, that is, with the CEO.

What else do CEOs need to know?

The straight talk and guidance offered here are just some of the advice provided in The CEO's Guide to: Talent Management. In this booklet we offer a wealth of useful guidance to your organization's chief "talent champion" as well as practical advice to benefit everyone involved in talent management. If you need to raise awareness about talent management in your organization, we encourage you to check it out.

Adapted from The CEO's Guide to: Talent Management

Audrey B. Smith is senior vice president, executive solutions, DDI.

Richard S. Wellins is a senior vice president at DDI.

Matthew J. Paese is vice president of executive solutions at DDI.

 

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