TALENT MANAGEMENT

Episode #231 transcript

If you're a regular listener of No Bullsh!t Leadership, you'll know that I speak frequently about talent in a range of different contexts, but the word is so overused these days that it's hard to differentiate between the real work of nurturing and developing your best people with the more mundane aspects of running a business.

There's a number of critical components to understanding and managing the talent you have, and you won't know who your real talent is unless you implement a robust process across the whole team. Sometimes as busy as we are, we rationalize that it's easier just to leave talent growth to happen organically. We tell ourselves that all our people are excellent and we avoid the hard work of leadership. 

But if you want your team to perform at its peak, you can't do that without a strong focus on performance and talent management.

In today’s LinkedIn Newsletter, I give you a quick summary of a great study from McKinsey, before going into a little detail about the leadership psychology of talent management. Then, the meaty part of the article is an overview of the essential elements of the talent management process, which I cap off with a few tips for where to start with talent management, no matter where you are today.

CEOs THINK THEY’RE DOING PRETTY WELL…

I came across an older McKinsey article from 2019 (so this was pre-COVID, obviously) titled Confronting Over-Confidence in Talent Strategy Management and Development. The article cited a wide-ranging survey on talent management. It found that CEOs and Heads of HR were bullish about their talent management strategy and performance, but others in the organization weren't anywhere near as positive.

Talent management's one of those things that's hard to measure, as it can be quite subjective. I'm not going to go into the nitty-gritty here, but you can check the article out yourself, if you’re interested.

Amongst the key findings, most interestingly, the biggest impediment to successful talent management is the leaders themselves. They don't value talent management, and they don't value clear structures, roles and responsibilities in order to streamline the work. They don't even believe in the concept of evaluating people performance, only business results. They don't value continuous improvement practices, and they lack a culture of feedback. Talent takes a backseat, as leaders say they “have more important things to worry about”.

This is a classic case of the leaders at the very top believing their own bullsh!t. They overestimate the execution capability of the organization when it comes to implementing the processes that they've put in place. They may even kid themselves that there's rigorous discipline behind the outputs from their talent management process, even when it doesn’t have the buy-in of the leaders who are supposedly driving it.

McKinsey also cites some research they carried out with the Confederation of British Industry (CBI). It found that if companies in the UK moved up just one decile in people performance relative to their peers, the resulting boost in labor productivity would be worth £110 billion per annum.

This speaks to the entire talent cycle:

• How do we attract the best people we can using our brand and our employee value proposition?

• How do we filter the talent through our selection and recruitment processes?

• What do we do to develop and nurture the talent once we have it?

• How do we differentiate between people throughout the performance management cycle?

• How do we ensure that our best people are working on the most important things?

• How do we tell the difference between someone who's really delivering and someone who just talks a good game?

• How do we promote the right people, not just carbon copies of ourselves? 

It's a lot to think about if you're a leader, but hey, that's kind of your job.

ARE ALL YOUR LEADERS ON BOARD?

In this episode, I want to focus on how to manage your talent once you've acquired it. You have to have not just the processes, but the culture to rigorously manage the talent you've got. This means your leaders must value their people and be comfortable in differentiating between those who perform and those who don't.

This might sound pretty obvious, but it can be more of an issue than you might think.

I remember going into a role many years ago, and one of the first things I did was to ask all the general managers who reported to me for a snapshot of their leadership talent. While most did this as diligently as they could (albeit rather optimistically), there was one woman who refused to play ball–in a rather passive-aggressive way, of course. When I asked her to rate the performance of her 30 or so leaders, she insisted that they were all performing to a high standard.

Looking at her division this wasn't true, self-evidently. So I sent her back to rethink it after giving her some gentle guidance. But she came to me a week later with exactly the same story: all the leaders in her division were performing really well, and you couldn't get a struck match between any of them.

Needless to say, I replaced her as quickly as the organization's processes would allow, and I brought in an external leader who I knew would at least have a crack.

So, your first step is to make sure that every leader below you in the hierarchy is willing to do the hard work of performance management. Anyone who's not is going to show themselves fairly quickly and then you'll have to make a choice.

My strong view is that any leader who isn't committed to growing and developing their people's talent and capability simply shouldn't be there. You’ll probably have to make some tough decisions about what to do with those people. If you land on the soft side and choose to leave them in place, well, that's absolutely your prerogative: but just know that if you do that, you'll never get the uplift in productivity and performance that you know is possible.

The moral of the story here is that if you want to lead for results, your success will be almost entirely dependent upon the talent you're able to build in your team. The higher up you go, the more this becomes the case. If you look at it from your people's perspective, how much better off do you think they would be if you adopted a structured approach to their development and career planning? Talent management matters.

ESSENTIAL COMPONENTS OF TALENT MANAGEMENT

I can't do anything more in a brief newsletter than give you a quick fly over the top of how to apply talent management processes. Suffice to say that we go into much more detail in our Leadership Beyond the Theory program, and we even provide spreadsheet templates to show you how to set up an end-to-end talent management system.

There are five main components to performance management that you'll need to put in place to adequately manage your talent. I know this sounds like a lot, and you might find this a little daunting at first but, like anything, you should just adopt a fit-for-purpose approach that enables you to scale it to suit your specific circumstances.

This particular assessment framework I'm talking about applies to anyone in a leadership role. The assessment for individual contributors is somewhat simpler.

1. Leadership Behaviors

The first of the five components is an assessment of how your leaders behave. This is critical if you want to avoid the talented jerk syndrome. It has to be part of formal performance assessment, and it has to be weighted against other performance criteria. It's relatively easy to find examples of good and bad behavior in your direct reports, and perhaps you can assess them against the company values.

2. Leadership Performance (across all dimensions)

The second component is a broad-based performance assessment. When I say broad-based, I mean an assessment against all dimensions of leadership performance. This includes commercial and financial performance (of course), but it also extends to how well they lead, how well they manage, how well they collaborate, and how they set personal standards.

This is all about how each leader performs in their day job: to what extent do they meet, not meet, or exceed the various aspects of their role. You'll need a standard template here that applies to all leaders at the same level.

The individual elements of both performance and behavior assessment can be mapped on a simple, five-point scale. This is going to enable you to put a weighting on each element according to its relative importance, and then average the results to come up with a quantitative score.

Just bear in mind though, any score should just be a guide rather than a be-all-end-all. Don't allow your team to get into discussions like, "Well, Mary scored a 4.13, but Jeff only scored a 4.10, so Mary is clearly better." You also need to recognize that you'll have easy and hard markers in every leadership role, so some level of moderation is going to be required to make sure you adjust for this.

3. Key Performance Indicators (KPIs, KRAs, MBOs etc)

The third element is key performance indicators, which are normally annual targets that are set to achieve specific objectives. This is what many businesses see as ‘performance management’. Did this person achieve their KPIs?

KPIs are useful, but they have all sorts of issues. For a start, they tend to be fairly one-dimensional, which is why you need to use KPIs in conjunction with a broader performance assessment. Most often, they're not set particularly well: they tend to be very conservative based on an individual nominating something that they're almost certain to achieve.

It's also hard for any objective to survive the timeframe that's set for it: a lot can change in the 12+ months between when an objective is set, and when it's scheduled to be delivered. And even though they're often tied to additional compensation, it's difficult to link the performance payment to outcomes that genuinely deliver value.

4. The Dreaded Nine-box

The fourth element is the nine-box. This is where you map your people on a grid to compare their performance and their potential. It's called a nine-box, because there are nine squares on this 3x3 matrix. 

On the X-axis (the bottom of the grid), you have performance: Not Yet Full performance, Full performance, and Exceptional performance.

On the Y-axis (the side of the grid), you have potential: Mastery, Growth and Turn potential. 

This enables you to create a visual representation of all the leaders who function at the same level with each other. You'll see who's cut out for Mastery (so in other words, where progression means simply learning to do the same job better), who's cut out for Growth (where you believe they'll be able to take on bigger jobs of similar complexity), and who's likely to Turn (those who are likely to be successful if promoted into a higher level role).

The nine-box serves three really important functions:

1. It enables you to frame an evidence-based discussion and debate about the relative merits of your leadership talent;

2. It provides a historical record of each leader's progress as they move to different boxes over time; and

3. It enables you (on an individual basis) to give your leaders feedback about how the organization views them, and how that aligns with their ambition. For example, if someone sees themselves as a strong prospect for promotion, but the organization's view is that they're not a high performer, well, they sort of need to know that.

And remember, there is no potential without performance first.

5. Individual Development Plan

The final element is the individual development plan. This is where you bring it all together. You put together a future roadmap for each individual, and agree how they're going to progress their career. This might involve formalized training, or stretch assignments, or maybe even external coaching and mentoring. 

People need to know they have a future development path, if they have any ambition to progress. One of the most common problems I encounter is that performance management outputs don't channel towards the development plan.

I've been in organizations where the Head of HR runs the performance management process like a star chamber. Individuals are discussed and rated, but they're never given feedback. They're either anointed for further advancement or they're punished for perceived shortcomings (with very little evidence required for either). This can make or break someone's career, at least in that company.

But if you give people certainty on how the organization views their past performance and their future potential, they're going to be much more comfortable in that knowledge, even if it isn't the news that they would've liked.

What I've just described in those five elements is the complete, end-to-end process for talent management of the individual. Every person is assessed holistically on their performance and behavior, with a view to their future career trajectory. They're given clarity and certainty about how they're viewed by their boss, and they have an understanding of the path they need to pursue to develop their career to get to the next level.

BRINGING IT TO THE WHOLE-OF-ORGANIZATION LEVEL

The only other aspect of the performance management cycle, from an organizational perspective, is the need to understand key roles.

This is an important part of talent management, because some roles are more important than others. Let's be frank: some roles require a rare level of expertise that incorporates key elements of the company's intellectual property; some roles are crucial to the day-to-day operations of the business; other roles, well, they can be easily sourced from the market and they present much less risk if (for whatever reason) someone can no longer perform that job.

Knowing this can help you plan for the future:

• Which roles do you need to put your best people into?

• Who holds critical IP in their head that you should be getting out of their heads and into standardized processes?

• Who needs to be trained in a particular core discipline to ensure you don't lose corporate memory?

• What are the opportunities for cross-skilling to help you mitigate the risk of a single point of failure?

Taking what you know about individual talent and capability and marrying that with the organizational view of which skills, capabilities and expertise are required gives you a comprehensive approach to talent acquisition, management and development.

SO, WHERE DO YOU START?

There's a lot to take in here and, depending on the company you're in, you may already have a complete well-worn process for talent management. But, equally, some of you in smaller businesses will only have informal or superficial tools and processes.

So let's give a few guidelines for where to start. I want to break this up into three sections: the first one is, where do you start if you already have mature processes in place?; the second is, what if you have some processes, but talent isn't part of the culture? And, finally, what if you have no formal talent management processes at all?

1. The Mature Organization

Let's start with the case where your organization has good, mature talent management processes: of course you're going to be bound to follow these. So, where would you focus your energies? Well, the first place to focus is to understand any gaps that might exist in the process. For example, you may have good individual assessment tools, but no organizational processes like the nine-box mapping that brings it all together.

If this is the case, then whatever observations you've made, you need to take those to the person in the company who's responsible for that process. Make a mental note to change it to make the process more robust as you go up through the ranks. And, if there's anything you can do in the short-term within the confines of the existing processes, make sure that you incorporate that.

For example, there may not be a formal assessment of each individual's values and behaviors as part of your organizational process, but it would be easy for you to just build some assessment of values into your one-on-one conversations, so you can do that quite easily.

2. The Informal Organization

Let's have a look at the second case: if your current organization's talent management processes are a little sketchy or informal. In this case, you may need to build it out a little, maybe by creating a fit-for-purpose framework for your own people. In these cases, it's easier to start at home and do this yourself first: then you can take it to the broader organization and say, "Hey, look what I've been doing to track and manage my talent. The company might benefit from adopting this approach more widely."

Once you have something in place that you can use in ‘pilot’ mode, you can lead organizational improvement regardless of the level you're at now… and you'll be earmarking yourself as being a leader of the future who thinks a little more broadly than your own narrow portfolio.

But don't be too surprised if you get some resistance to this. Some people are going to push back, because it looks too much like the hard work of leadership. Others are going to push back, because you're showing them up in what would otherwise be considered their day jobs.

3. The Ad Hoc Organization

Finally, the third case. If your current organization has no formal talent management processes at all, where do you start? Well, the best place to start with anything is with a conversation. If you have no formal processes, don't try to boil the ocean by implementing a fully functional, holistic talent management framework. Instead, just understand what's important in managing the talent you have and start building the essential conversations into your one-on-ones.

All you need to do is follow the four target areas I outlined above:

1. Values and behaviors;

2. Performance in the day job across the main elements of the role;

3. Delivery of the agreed objectives or KPIs; and

4. A development plan for how they can progress their careers.

Until you have that, the organizational view doesn't make much sense, so you can leave that alone until you reach a greater level of maturity.

TALENT MANAGEMENT DRIVES PERFORMANCE

Just having a few of the more basic elements of a talent management framework will vastly improve your people's performance. It'll increase the likelihood that you'll be able to retain the talent you've got, and it's going to enhance your ability to protect the key roles in your business.

If you do nothing else, make sure that the types of things that would typically form part of the talent management framework become part of your feedback discussions.

People love knowing where they stand, and if you don't promote a culture of accurate, targeted, evidence-based feedback, you're never going to get the most from your people. 

If you truly believe that your people are your greatest asset, this is where the rubber meets the road, so take those first few steps and set the example for the other leaders in your company.

FURTHER READING

I want to recommend one of my favorite books, The Leadership Pipeline. It's been around for a while, and it's the Bible of talent management and leadership development. Steve Drotter, the lead author of this book also recently published a new book, Pipeline to the Future, and this brings the concepts of leadership development and performance uplift to the small business context. Check these out if you want some real depth on talent management.

RESOURCES AND RELATED TOPICS:

• Episode #146: Succession Planning - Listen Here

• Episode #4: What is Leadership…Really? - Listen Here

• Episode #101: Keeping The Ones You’ve Got - Listen Here

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