In this final part of the series, our focus is on how talent silos impact the successful execution of business strategy and ultimately, business outcomes. The highest level of maturity in Talent Management requires talent processes and the HR organization to be fully integrated with business, not only facilitating the execution of the business strategy, but driving it.
Does This Sound Familiar? A Recruiting Fire Drill
Let’s take a look at another fictitious company, TECH, a global technology company whose focus for the last year has been developing new products to replace other products entering the last stage of their lifecycle. TECH’s customers are very sophisticated with deep technical expertise. Therefore developing products requires that, upon release, customer support professionals have significant technical expertise on the product specs in order to provide the support customers expect.
TECH’s manager of customer service, Barbara, gets pulled into a meeting and is told that she has to have support ready for a new product in four weeks. This product, called XC45 has been in development and testing for over a year. "No one could tell me three months ago that I needed to hire an extra 10 people!?"
Now Barbara has to pull her most senior people off their current work and train them in record time. "I cannot backfill their positions and have the new personnel ready in two weeks."
Barbara goes to her recruiter, Jason, who tells her that they may be able to get some temps to help. Jason thinks to himself, "If I would have known about this – I could have built a pipeline of external candidates and we could have brought them on in time to have them trained. I could have even built a talent pool of internal candidates that could have been developed to be ready. Now we are going to pay a premium for support resources and potentially impact our existing customers."
Silos Lead to Poor Resource Planning
Okay, so TECH may have to pay for external support resources. What else might result from this lack of resource planning? When a customer purchases the new product and has a question or an issue, or if customer support cannot provide the level of technical support customers require, the success of the product may be impacted. Word will go out within the tech industry that there are issues and maybe some customers will go to a competitor. In this particular industry, bad press can impact the company’s image for years to come.
This silo is a fairly common one that has significant consequences beyond increased costs. Often, business units do not think about how staffing and planning for headcount (or lack thereof) will affect the successful execution of strategic plans. Without the resources to execute, the plan stops short. HR needs to be at the table to understand the business plans and help leaders understand the lead time for having resources ready to hit the ground running.
Seeing the Interconnectivity
Many of you are thinking: "Removing the silos from these business scenarios is way above my pay grade." Well – yes and no. One way individuals can overcome their tendencies toward silos it to use systems thinking. I think the best definition comes from Virginia Anderson and Lauren Johnson in their book Systems Thinking Basics, "a school of thought that focuses on recognizing the interconnections between the parts of a system and synthesizing them into a unified view of the whole." Some key points include:
- You do not "own" your area. Be open-minded about input from others regardless of your title or expertise.
- It just MIGHT be your job. Don’t be a slave to your job description. You actions and decisions impact others and ultimately you share accountability for performance of the organization.
- Knowledge TRANSFER is power. You might actually achieve the influence and status you want by becoming a source of useful information. Help others become better and you will be better. Keep others regularly informed and frequently share your ideas.
Moving Theory into Practice
If you are in a position to tackle broader issues within your organization here are some tips for helping break down silos:
- Enable and encourage broader and more diverse input into the decision-making process. Innovation comes from unexpected parts of the organization and through the cross-pollination of ideas from different areas (read, The Medici Effect: What Elephants and Epidemics Can Teach Us About Innovation by Frans Johansson.)
- Effectively implementing the first tip can result in meeting hell in some cases. Too much input and/or the ineffective management of the meetings can make them an incredible time drain. Use effective meeting management techniques (agendas, facilitators, etc.) to avoid the possible negative repercussions that can result from expanding meeting participants.
Silos are formed when we get caught up in the day-to-day work of our area and our perspective narrows to just what is in front of us. By stepping back and looking across the system or organization, our perspective changes drastically.
If your organization does not have clear strategic goals – then get some (that is a whole other subject.)
If your organization has them, you already have the one tool that can break down silos. With clear strategy, silos have a common language around which to collaborate and collaboration IS the remedy.
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A New Poseidon Adventure: Flipping Succession Planning Upside Down
Organizations make significant investments in efforts to hire the right candidates – the people who have the right experience and cultural fit. By carefully managing the performance and potential of these people over time, the organization can grow its leadership pipeline, keep a steady inventory of needed skills and competencies and remain nimble in the face of change (which we have plenty of all around us these day) – all of which can have serious impact on the bottom line. However, much of this pie-in-the-sky stuff relies on being able to locate and cultivate high-potential and high-performing talent across the board. Without an integrated succession management solution, recognizing and developing talent can be an ever-elusive process. The questions we are seeing asked today include: does the traditional top-down approach to succession management still make enough of a difference? Does managing succession for a slim strata of senior executives take full advantage of the kinds of talent data we now have at our fingertips? It doesn’t have to be so. Succession management can be an interactive process between senior leadership, managers and employees at all levels of the organization. And, if we trust them, we can actually let employees become active participants in their own career development. (Shudder.) Career Management (Succession Planning Flipped Upside Down) This "bottom-up" approach is gaining momentum because who better to tell us about employee career path preferences than employees themselves. Organizations actually have talent management and other HR systems in place that allow for collecting and analyzing a whole slew of data around: Career history Career preferences Mobility preferences Professional and special skills Education achieved Competency ratings Performance scores Goal achievement Training and certifications Etc. In short, pretty much everything we’d want to know to make well-informed succession planning and talent pooling decisions. For some, the leap is simply putting some power into the employee’s hands. The talent management system of 2011 is capable of displaying a clear internal career path for employees and then, on the basis of all that data bulleted out above, showing a "Readiness Gap" – what do you need to do to make the step to the next level? And if your talent management environment comes armed with a real Learning Management System, you can take it to the next level with a dynamically generated development plan that gets the employee on the right path to actually closing those gaps. Faster development, faster mobility. Organizations that seriously favor internal mobility don’t just make employees stick on pre-defined career paths – they can search for ANY job in the company and check their Readiness levels. I might be in accounting today, but what I really want to do is move to marketing. Giving employees the chance to explore various career avenues within the organization helps assure that "water finds its level" – that is, that the right people with the right skills and the right levels of motivation and engagement find the right job roles internally. Employee participation is key, but make no mistake – managers play an important role in this interactive process. They must be prepared to provide career coaching, identify development opportunities and recommend employees for job openings. The candid discussions require that employees have open access to information so they can best understand the criteria necessary to move to the next level. A Two-Way Street Employee-driven career management is just one tool. The more traditional top-down approach to succession management remains indispensable. But organizations that value talent mobility and the ability to be able to shift and mobilize talent resources quickly will find that attention to career pathing can be vital. For employees, of course, the impacts are immediate and include boosted levels of engagement, higher retention, increased productivity and more.
The Hidden Costs of Ignoring Your Talent Management Strategy
Building and maintaining a successful company hinges on having the right people to execute projects and drive results. People, we hear time and again, are your company's most valuable asset. But their success — and HR's ability to recruit, engage and retain them — depends on HR pros who are strategic decision-makers, armed with the proper tools to let them excel at their jobs. Modern HR professionals manage much more than payroll and benefits. But their technology tools, in many cases, haven't evolved past basic productivity software like email or Microsoft Word. HR simply can't be strategic with old-school tools that reduce people to statistics and give little insight into what the numbers mean. Emails and spreadsheets were not designed to deliver meaningful insights into people's performance, suggest when employees should be promoted or highlight skills gaps in a company. For that, HR needs a broader, more strategic set of talent management tools, which lets professionals manage every aspect of the workforce, from training and performance reviews to collaboration and succession planning. Yet, research shows that less than 25% of companies use a unified, holistic approach to their talent management. The Real Costs of "Doing Nothing" As a Talent Management Strategy The critical relationship between business strategy and HR strategy too often gets overlooked by senior leadership. While it may seem like the company is saving money by managing recruiting, training, performance and succession via manual and paper-based processes, in reality it’s costing your business more than you know. For example: Without a talent management strategy, a company with 2,000 employees is losing almost $2 million every year in preventable turnover alone. Businesses that don’t invest in learning suffer from decreased employee performance and engagement to such a degree that they can expect to realize less than half the median revenue per employee. That’s a direct impact on the business. In employee performance management, organizations without a focused strategy waste up to 34 days each year managing underperformers and realize lower net income. To learn more about the business impact of talent management and how to start building out your strategy, check out the eBook Why Your Nonexistent Talent Management Strategy is Costing You Money (And How to Fix It) and register for the March 19th webinar, Building the Business Case for Talent Management.
The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance
With the economy now on steadier ground, most organizations have returned to administering a merit budget to the pre-recession levels of 3 to 3.5%. In the years immediately following the economic downturn, many merit budgets were eliminated entirely or were reduced significantly and reserved for a select segment of the employee population. Pay for performance has become a necessity for many organizations that are expected to accomplish more with fewer resources. I often get asked: "How can I truly award my top performers with such a limited budget? Should I do so at the expense of my ’Meets Expectations’ performers? What if I need to retain my ’Meets Expectations’ performers and giving them 0% to 2% increase puts me at great risk for turnover? But if I don’t recognize my top performers, don’t I risk losing them...?" These are difficult questions to answer, however you can determine the best solution for your organization by considering the following: Are your employees paid at market pay levels? Is your organization’s performance management process mature? Does your organization have other compensation programs in place to reward top performers (e.g. variable pay)? Market Pay If turnover is a concern, and your organization needs to maintain ’bench strength’ in order to achieve its strategic objectives, your biggest priority should be to ensure that you are paying your employees at market pay levels. Why? Historically, as the labor market strengthens, organizations become vulnerable in terms of losing people. Hiring and onboarding replacement talent is not only costly to the organization, but can also cause dissension among existing employees since new hires may be getting paid more. Be sure to stay abreast of market pay levels and trends, and use the merit budget to correct disparities. Performance Management Process Organizations vary significantly in terms of the maturity of their performance management process. Closely examine your organization’s process and look for ways to improve it. If there is a perception that one management team is an ’easier grader’ than the others, the process is inherently flawed and any pay for performance program will not be viewed as credible and fair by employees. A good place to start is to get a calibration process in place and communicate broad guidelines on expected distribution ratings. Variable Pay Programs Variable pay programs (e.g. bonuses) have become increasingly more popular across all industries and career levels. These programs provide the opportunity for employees to share in the organization’s success while not adding to fixed payroll costs. Some plans have an individual performance component which can be a very effective means to recognize top performers. However, in order for this type of program to be successful, individual goals and targets must be well documented and communicated. Again, this is largely based on the maturity of the organization’s performance management process which takes time to evolve. What are the best steps to avoid wreaking havoc on your pay for performance process? First ensure your pay levels are keeping pace with the market Continue to evolve your performance programs with calibration among managers and a rigorous goal setting process Promote variable pay plans to reward high performers without adding to fixed pay roll costs It’s not always an easy journey but, in the end, it’s best to use a measured approach that is based on business needs and a realistic assessment of your current programs and processes.