Top talent - time for a rethink

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Written by Tom Quayle on 1 June 2014 in Features
Features

Tom Quayle examines how organisations are developing their top talent and suggests ways of improving return on investment

Few organisations today can afford to squander £1.2 million a year. But according to research by CEB1, the world’s largest member-based advisory company, many are doing exactly that – and ironically, they are throwing away that money in the pursuit of strong leadership, with ill-considered and ineffective top talent programmes.

This article looks at what organisations are getting wrong, warns of the implications of their misjudgments, and tells us what we need to do to get our top talent strategy right.

Top talent is all about retaining the people that the organisation believes have the potential to perform for the business in the future. Programmes are about people, and – unfortunately – they tend to be full of the wrong people.

Even where an organisation has managed to identify the right person, and that’s definitely not always the case, there’s a very real chance that this person will not meet their own potential because the organisation doesn’t nurture them or provide an eco-system conducive to their development. The organisation’s leadership styles, processes or culture may be misaligned, or it may boil down to something as basic as the top talent being surrounded by colleagues who aren’t on board.

Potential – what it is and how to spot it

Organisations have spent millions on selecting and training those they expect to lead them in the years to come, and yet they continue to misidentify future leaders. And all because of a basic error – mistaking performance for potential.

Organisations are asking the wrong questions – they are asking about today’s performance. While this might identify a top sales person or your company’s most creative technology expert, it won’t tell you anything about how they will perform in the future. Today’s great performance gives no indication, or guarantee, of how the same person will react to a very different set of circumstances – a new role and responsibilities, greater exposure to stakeholders or changing market conditions.

For us, potential is a propensity to display the behaviour and values that you would want to see in the future – and therefore you need to know what that future looks like.

If you look at any kind of formula in most big businesses, they will use a performance versus potential matrix, so when they talk about performance, for example in the context of sales, that will be in relation to the numbers they are achieving today, but when they start talking about potential, they are really just talking about the same things.

Subjectivity is a problem too, in terms of identifying potential. Someone will look at an individual and think ‘That was like me at that age’, then make the assumption – without any proof whatsoever – that the younger person, too, is senior management material. Organisations also make the mistake of assuming that someone being able to do something once is a guarantee that they can do it again, equally well.

Take sports, for example – a shocking amount of talent gets overlooked in sportspeople at a young age because they haven’t quite grown up yet or they didn’t kick the ball quite how the scout expected. Sporting talent is not just about these elements, however. There are a bunch of other factors that equate to high performance.

It’s also about psychological make-up, so it could be that someone with the right physical or performance attributes at the age of 12 ends up far less capable a sportsperson at 17 than someone who lacked the same attributes when younger.

This leads to what author Malcolm Gladwell calls capitalisation – the number or ratio of people who achieve their true potential. The capitalisation rate of individuals within organisations is very low because organisations don’t really understand what potential is.

Not only are organisations recruiting the wrong people for their top talent programmes, many of them have yet to define what they need the talent for, so in effect they are filling positions without having truly understood the job specification.

Where top talent programmes fall down

Regardless of whether or not they involve the ‘right’ people, top talent programmes in the UK are not working; the set-up of organisations in general is not conducive to producing top talent.

The challenge is that when people are put on a top talent programme, most of the time they’re in their ‘individual contributor’ role. They’re suddenly taken out of a particular role which is about individual contribution and thrown into one that is more about collaboration and being able to work with multiple stakeholders. It could involve a completely different personality set when it comes to hard performance.

And that seems to be the only trajectory – there isn’t a top talent programme for tech specialists, or sales people, for instance. If you want to go upwards in the business, there’s only one path, into senior management.

And clearly there should be a top talent programme for specialists who don’t necessarily want to go into senior management. Talent is everywhere, and recognising and rewarding it is one way of keeping it in the business.

The whole idea of top talent programmes is that participants are very, very quickly promoted. Part of the aim of the programme is to stretch them. The only thing an organisation has to go on, however, is performance, and when people on top talent programmes aren’t doing as well as expected, the question is asked: “Why aren’t they performing? I thought they were top talent, they performed in their last role.”

Where it has gone wrong, is that you’ve got people on top talent programmes who have not been given enough time or the type of coaching that, as an individual, they’re going to need. This is a key part of the eco-system failure I mentioned earlier.

Organisations forget that if people are going to make this leap, which is quite substantial, the top talent system needs to be tailored around the individual journey that they’re going to go on, and the support that they’re going to need. Just because they’re on a top talent programme doesn’t make them highly robotic performance machines.

At an even bigger level, it’s about the economic cycle. Germany, for example, is one of the only places where spending on people and talent development stays stable, or even increases, in difficult economic times. German companies are typically more long-term in their approach because they don’t have the shareholder pressure or the quarterly cycle that UK companies do – they are thinking in terms of a year or 18 months.

In the UK we take a very short-term view, and while top talent is a long-term concept, our organisations persist in looking at it in a short-term way.

What happens when organisations get it wrong?

Apart from the financial implications – remember that £1.2 million a year – there are enormous consequences to getting your top talent strategy wrong.

Fewer than 20 per cent of the people on top talent programmes end up in senior leadership roles. That leaves a lot of people, possibly brilliant specialists, disenchanted and floundering. They may well leave your organisation and take their skills to the competition. This will not only cost money but can leave remaining staff with a sour taste in their mouths, along with questions about their own career progression.

And it’s worth remembering that not all of those who make it into senior management – or even onto the board – should be there.  They will usually stick it out because of the financial benefits and the prestige, but they may be there under false pretences, having being promoted on the basis of their performance rather than their potential. And this often leaves them underperforming in the more senior role.

This is where organisations need to be more creative in how they look at talent. Rather than maintaining the traditional, blinkered view that top talent is destined for, or already on, the path to management, they should be looking ‘left and right’ to identify other talent elsewhere in the workforce.

Rather than being restricted to the usual linear path into management, when an employee comes into an organisation, he or she should be able, instead, to opt for the sales, technology or marketing journey, for instance.

Organisations are then in a position to push the top talent into the right places, rather than trying to bundle all of it into one area – the traditional top talent programme.

There is talent everywhere within the organisation, but we are not optimising it. If organisations placed people better, based on the talent they had, and put the right individual in the right role, this would have a far more positive effect than getting 10 people to the top.

We can fix this

Understanding that you need to look at potential rather than performance is one thing, but identifying potential is, if anything, a greater challenge yet.

Today’s methods of predicting performance are only ever about 25 per cent accurate because they are about experience, in other words, what someone did today. To be more accurate, we need to look at talent through a different set of lenses.

Organisations need to look at five main factors: intellect, values, motivation, behaviours and experience.

Some professions – such as the law – do not require people with an especially fluid intellect. Someone can be a great lawyer without having it because they have a luxury of plenty of preparation time. Someone going into an organisation at senior management or board level, however, will find themselves in a very fast-paced environment and unlikely to succeed without it.

Values are what people care about, their core traits. These are instrumental in shaping their behaviour, and may manifest themselves in a desire to build relationships or an interest in interacting with others. Motivations are where people get their energy from – for example, whether managing a team energises or de-energises someone.

Motivation is key to an organisation. We know leadership is broken because in almost every single organisation we go into, a large percentage of line managers are not motivated – they have been promoted into roles which are not necessarily aligned with their personal motivations. They may be managing teams, for example, when they are happier managing projects.

Surveys and psychometric testing are useful when it comes to learning what motivates staff, but perhaps what is more important still is the action that results from the survey or testing process, and how the organisation interprets the results. It’s worth bearing in mind that levels of extroversion, for example, may look the same on paper but vary substantially from one individual to the next. This is where the system falls down – with poorly motivated line managers failing to really talk through the results with the people involved.

Behaviour that is what people will do, rather than what they can do – refers to people’s natural working habits, the things they do without being aware. It’s hard-wired and very difficult to change, but understanding behaviour is crucial – by looking at it, you can predict how likely people are to make it to senior management, and how long they are likely to stay at that level.

Finally, experience – what your staff have done in the past. Given that organisations are thinking about future potential, this clearly shouldn’t be the only data point.

If people don’t have the right levels of these five factors to suit the individual organisation’s need or aren’t able to adopt them quite easily, people, however talented, are going to struggle, particularly with the environmental elements inherent in senior management. They will get promoted, but they won’t perform, and they’ll get spat out by the organisation.

If an organisation really wants to fix its top talent strategy, the immediate priority is to look at it fully and ask what those on the programme, or being considered for it, would need to do – in other words, what were they being expected to have the potential for? If it’s potential to be on the executive team, then look at the existing executive team and analyse what the shape of high performance looks like within both that particular group of people and the organisation as a whole.

Most organisations are failing to understand the context of the type of leader they need, for example lots of organisations use psychometrics and other profiling tools to understand talent but they continue to talk about top talent in blanket opinions. The more highly extroverted a person is, they reason, the more likely they are be to be a top performance sales person, or a better leader.  This is not necessarily true.

Once you know what your ideal leader looks like, look at the people potentially on the top talent programme, and consider how their profiles shape up compared with what great looks like at that company.

Going through this process will have given the organisation a clear idea of what is needed, and who has high potential. Understanding candidates’ values and motivations will now allow the organisation not only to tailor its course to suit their individual development, but to identify and tackle potential problems before they materialise.

This is where it is important to pick a bespoke approach over a blanket approach. A lot of organisations have a model for potential when it comes to leadership. That’s completely wrong.

Not all potential leaders are the same, and they will respond differently to factors such as the environment and the organisational culture. A successful top talent programme is about identifying the right people to do the job, then facilitating their development in a way – and at a speed – that will bring out the best in them.

The business case for investing in your top talent strategy

As soon as there’s a hint of recession, organisations cut their people budgets. Spending on talent is an easy target because recruitment and talent development teams repeatedly fail to have the right conversations with the business.

They need to be able to have a more commercial conversation, showing the return on investment for the cash spent on top talent. Without this conversation, organisations are basing their decisions solely on what they see – that the people on their top talent programme are underperforming.

HR lacks credibility in the value-creating areas such as development and recruitment. All you have to do is look at the statistics to see that top talent isn’t working and recruitment is broken.

Development programmes aren’t seen to have any sort of commercial value. Until HR grows up and becomes a lot more scientific about why and where they’re spending their money and what the prospects are for return in investment, they set themselves up not to be credible, but to be the people who talk about headcounts.

The key to convincing organisations that they need to offer bespoke top talent programmes lies in the statistics. Just 20 per cent of people on top talent programmes make it to senior management – think of the impact on both the bottom line and the organisational culture if accuracy in predicting potential could be improved to 70 or 80 per cent, which we think is possible.

Fixing the top talent strategy is about organisations shifting how they think. Once they’ve done that, they’ll find themselves creating opportunities for their people to be brilliant at work – and they’ll finally know what to do with their talented people. The impact will be enormous.

Reference

1 CEB research – http://bit.ly/1vLcL1i

About the author

Tom Quayle is behaviour change architect, The Chemistry Group. He can be contacted at tomq@thechemistrygroup.com

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