Intelligent Talent Management: A Step-By-Step Guide
by Rand J. Gruen Ph.D.
President, Corporate Integration Strategies, Inc.
In the face of the recent downturn, many companies, including those in marketing, advertising, PR, and branding, have come under increased pressure due to declining revenues and profits. As the slowdown drags on, many are looking for ways to increase profits. Cutting costs is an obvious and potentially attractive option. In the service sector, salaries and employee benefits account for a large proportion of a company’s budget. One way to control costs then, is to cut salaries and/or employees. While this may be necessary (or even desirable), it is often done without a guiding set of principles or clear conceptual framework. The result is that valuable talent can be lost in an effort to save money. People with the capabilities that were lost then need to re-hired when cash flow improves.
The purpose of this article is to provide a framework for making targeted, informed human capital decisions. Use of this methodology can actually lead to a stronger, more focused, and more competitive organization, staff reductions notwithstanding.
Business models and staffing decisions.
The foundation of the model rests on a simple core question: what organizational resources/skills/assets are needed to support the business strategy. The follow-on question then becomes, “does this particular employee (or group of employees) have these skills”. This information is absolutely necessary if one is going to make informed decisions regarding lay-offs.
All too often, these questions are not at the center of the decision-making process. Employees are often retained for a variety of other reasons including: how well liked they are, years of service, whether they are useful to certain key decision-makers, loyalty, historical factors, cultural values that over- or undervalue certain skill sets, attitudes re: lay-offs, the size of an individual’s salary, political considerations, legal concerns, etc. Just to clarify – I’m not suggesting that these factors are unimportant, but the first question should always be: “how critical is this person in terms of our ability to meet our business objectives?” To be in a position to answer this question, a fair amount of work needs to be done beforehand.
A Step-by-step Guide:
Step 1: Strategy development/review.
Human capital decisions are intricately intertwined with questions about business opportunity, competitive advantage, and strategy. While they are affected by organizational or cultural factors, at their core, human capital decisions are the logical expression and outcome of the strategy implementation process. As a first step in having the ability to make intelligent hiring and firing decisions, key executives need to understand the opportunities that exist to grow their business and the skills needed to exploit these opportunities. Those in the decision-making role must be able to answer the following 5 questions:
- What are our core assets, strengths, and weaknesses?
- What opportunities exist to grow the business, now and in the future?
- What types of skills do employees/leaders need to exploit these opportunities?
- What potential obstacles exist (i.e. competitive, local, regional, and global economic factors, etc.)?
- What types of competencies will be needed to overcome these obstacles?
In well-run organizations, the answers to these questions are known to key decision makers.
It is worth noting, however, that this is not true in all cases. In some cases, leaders have not clearly and sufficiently articulated a vision for growth. In others, the vision has been communicated to the executive management team, but not to those on the front lines (i.e. in mid-size companies, line managers 3 or 4 levels down) who are actually responsible for making decisions about who stays and who goes. If the people who are responsible for making key staffing decisions do not understand the business strategy in depth, they can not make intelligent staffing decisions.
Step 2: Competency modeling.
The next step involves the development of competency models. These models need to be division-, and potentially team-specific, as the skills needed for success differ across divisions and teams with different functions and goals. Frequently, when competency modeling is done, it is done at the organizational level. While this provides a useful heuristic, it is not terribly helpful and does not facilitate intelligent decision-making at the individual contributor level.
Effective communication of strategy and opportunity allows for the definition of prioritized team-specific skills and capabilities that managers can use to evaluate whether employees can be let go or whether they must be retained. I have consulted in more than a hundred divisions in over 50 companies in the last 15 years, and have found that relatively few companies institutionalize the practice of building competency models at the division or team level where it is really necessary. While most managers understand that some employees are more effective than others, and can specify the attributes that distinguish them from their peers, they rarely take this to the next level and define the full range of competencies subordinates need to be successful and then prioritize these.
The exercise, in and of itself, is not difficult. The problem is that line managers often don’t have a conceptual framework in their heads to organize and structure the process. This framework can be provided relatively easily in the form of a short-term organizational development/training initiative. The capability gained is critical, not only with regard to making informed staffing decisions, but also in terms of developing people going forward.
Step 3: Talent review.
Once one has a competency model in place, it can be used to assess each employee in a division or group. A number of options exist here – managers can gather their own data based on direct experience with subordinates, they can conduct cross-evaluations, or they can conduct 3600 assessments of team members. In the latter case, structured surveys or in-depth interviews can be conducted. The decision about which method to use depends on the specific context and culture. While the initial development of structured cross-evaluation and/or 3600 survey tools needs to done by someone with survey development and psychometric expertise, the process can then be managed internally, and represents a cost-effective way of assessing talent over time.
Once this information is available, decisions about lay-offs become much easier. While many factors must be taken into consideration (including legal, regulatory, and cultural factors), one now has data to answer the critical question of whether a given employee has the core skills needed to move the business forward. This, more than any other factor, should inform decisions about downsizing and staff reductions.
Armed with this information, executives can answer the following questions:
- Are there teams in the organization that are not critical in terms of our ability to reach our key objectives? Can these teams/roles be eliminated in order to experience a cost savings? Alternatively, can employees in these groups be reassigned or cross-trained to an area where they can add real value?
- Are there individuals who do not have the skills needed to exploit the opportunities that exist? Can we let them go or reassign them?
- Do we need to develop people or bring new people on board who do have the right skills?
It is important to note that, in cases where new people must be hired with high priority skill sets, the preceding enables executives and recruiters to do this much more effectively and efficiently because the key skills one is looking for have already been defined. This makes it much more likely that the right person will be hired and that these people will be successful in their roles.
Conclusions:
Systematic assessments of skills needed to execute against high priority business objectives are critical in making informed talent management decisions. In cases where costs must be reduced by eliminating roles, the model allows decisions to be made in a targeted way based on business priorities. Without this information, companies run the risk of losing essential talent. There is also a potential loss in terms of “organizational knowledge”; in the long run, this can make it more difficult for leaders to grow the organization when resources and market opportunities allow for this. Finally, there are costs associated with re-hiring people to replace lost talent. Clearly there is a monetary cost, as well as ‘hidden’ costs in terms of lost productivity as employees ‘ramp up’ in a new organization.
At its core, the model speaks to the importance of alignment between business objectives and assets (i.e., people). Human capital decisions represent an essential step in developing and executing against a clear business strategy. The methodology described above allows one to make informed decisions in hiring and downsizing situations, and represents an exercise that companies must engage in an ongoing way if they want to remain competitive in the face of changing technological, political, regulatory, and economic conditions.
Rand Gruen is President of Corporate Integration Strategies, Inc. , a management consulting firm specializing in organizational assessment and development. Rand has extensive experience in PR, branding, communications, advertising, and marketing, and has expertise in the areas of 3600, team, and organizational assessments; executive coaching; team development; strategy implementation; turnarounds; and reorganizations. Contact information: randgruen@cisww.net.
