Chapter 1.

The New Talent Assumptions

“Businesses need to be talent machines”

Jeffrey Garten, former Undersecretary of Commerce and Dean of the Yale School of Management1

Fasten Your Seatbelt! It’s Going to Be a Bumpy Ride

Take a minute to think about talent and the creation of great customer experiences. Now consider the following scenarios, and imagine you being the customer.

Contrast these examples to the following story told to me by Tony Hsieh, CEO of online retailer Zappos:

Or contrast an airport experience I had with the previous rental car saga:

These are not isolated examples of how talent plays a critical role in an ever-competitive marketplace. As a consumer, you feel frustrated — or delighted! Most of the organizations in these situations aspire to create a loyal customer, one who will recommend them to others. And yet, inappropriately tuned talent can cost organizations a huge amount in lost or disloyal customers. Worse yet, research informs us that truly unhappy customers will tell 10 or more other people about their experience.

Beyond irate customers, think about the costs of lost productivity, rework, accidents, or employee turnover that stem from talent not managed correctly.

As a consumer, you might wonder, why do such behaviors occur?

As an employee, there are enormous consequences for good and poor behaviors in today’s economic climate, not the least of which are the long-term self-respect and career satisfaction that most employees desire. Have they connected their behaviors to future success?

If you are an organizational leader, you are frustrated because you know the costs of dysfunctional behaviors to your business. Organizations increasingly have smaller windows in which to make their competitive mark and even shorter windows to hold it. In our interviews of C-suite executives, over three-fourths mentioned talent as a key factor for establishing a competitive advantage. For approximately half of them talent was the competitive advantage. The majority of these executives identified building winning cultures with sterling talent as a central goal for their company.

Let’s take a look at what some organizational leaders say about talent:

These executives no doubt see talent as a make-or-break element for their company’s survival and growth. They know they cannot execute their strategies faster and more effectively than the competition without the right talent, and few believe they can garner a distinct competitive advantage through capital, materials, or other sources without also leveraging critical talent. Innovative organizations such as Google, Apple, or HCL Technologies depend on constant innovation by their people. Preeminent service organizations such as Zappos depend on service excellence delivered by their people. Even low-cost competitors such as Costco or Walmart depend on the efficiency and speed of their employees to make thin margins pay off.

But most of the executives with whom we spoke lamented that they struggle to consistently achieve peak performance. They return again and again to three issues:

These are fundamental and practical questions about optimizing talent: questions this book addresses, not in theory, but in practice. I will share examples of organizations that are superior talent managers, show how to measure talent, and provide ideas about how you can achieve these outcomes in your own organization, and do so now.

The Road Ahead — Optimizing Talent

Given the new challenges, simply “managing talent” is no longer adequate. Rather, like all scarce resources, talent must be “optimized.” It cannot simply be optimized for today, but winning organizations create “sustainable talent” — talent that is primed for the long term. HR professionals can no longer ignore the CFO’s query about the return on investment (ROI) of talent expenditures. Those who can optimize their talent in service to their mission will be miles ahead of their competitors, especially those competitors who continue to manage talent in traditional ways.

We at the Metrus Institute define talent optimization as achieving the highest performance and future potential from the talent that you have invested in. Talent is defined as the collective competencies, values and attitudes, experiences, and behaviors of all sources of labor. Talent management is defined as all activities, processes, or behaviors that support the optimization of talent. And sustainable talent management is focused on achieving the long-term optimization of talent — not just performance for this week or this quarter. While I may talk more about employees in this book, remember that in today’s marketplace, talent is increasingly coming from other sources — contractors, consultants, or outsourced labor.

In my speeches around the globe, I am often asked why approaches to talent management need to change: “Haven’t we honed those practices over the past thirty years? If we simply execute recruiting, selection, onboarding, and performance management better, won’t that get us to where we need to be?” Sadly, the answer is no. As Anna Tavis, Vice President of Talent and Development of Brown Brothers Harriman, said to me, “Let’s face it. Historical approaches to talent management are no longer valid.”

Figure 1.1 summarizes some of the reasons why our attitudes toward talent management must evolve.

Figure 1.1. Ten Myths about Talent Management

Image

Traditional models of talent management often incorrectly assume the following:

These misconceptions illustrate the need to rethink many assumptions about the way in which we manage talent.

Let’s Get On with It

This book addresses how to become a talent optimizer in your organization, your function, and your chosen profession. I will describe in fair detail a concept known as People Equity — the net value contribution of an organization’s human resources — to explain why some companies are far stronger than others in optimizing talent, and I will answer the three key talent questions posed earlier by executives. The book will provide a path forward for anyone interested in optimizing talent for both the benefit of the organization and the individual.

In the years ahead for most organizations, talent will take on an increasingly central role as the most important (and expensive) resource needed to drive success. In this book you will learn how, by optimizing and measuring the three People Equity factors of Alignment, Capabilities, and Engagement, your organization — and you — can become the best you can be in achieving your goals and in outperforming competitors.

The next sections of the book identify and describe seven steps to take to make this happen. Organizations that achieve high People Equity are more successful in achieving their goals, delighting their customers, being profitable, attaining superior quality, and retaining top talent than organizations that do not. It is hard to argue with a path that enables both individuals and the organization as a whole to achieve success!

This journey will address the following topics:

Before People Equity is described in more depth in Chapter 3, we first must understand today’s talent context. Without context, understanding the implications and likely results of alternative talent strategies is difficult. And because today’s context is changing so rapidly, managing talent strategies, policies, and processes will require adaptability, strong influence skills, trust, and the ability to lead change. While optimizing talent comes with great reward, it also requires substantial changes, which may create fear for many. This fear must be faced head on and overcome — a subject for our next chapter.

To bring the subject of each chapter to life, you will find Action Tips at the end of each chapter to help turn the ideas discussed into action.

Action Tip

Identify the talent myths that currently drive decision-making in your organization. Engage other thought leaders in such discussions. Devise a plan for overcoming the myths that hold your talent strategy and organization back. For your convenience, a worksheet has been created at www.the-ace-advantage.com to use in discussions with teams in your organization.