Business Case for Investment in Talent Development

Greetings,

If you are in learning & talent development, you may still be dealing with reduced budgets and a perspective in your organization that "just-in-time" hiring will be the answer to what needs to happen to support the business strategy. However, there is a body of academic research that would call that approach into question...So lets look at how you can leverage this research to build your business case for a fresh look at creating a balanced investment portfolio in talent acquisition & talent development.

So first thing you need to do is read Dr. Peter Cappelli's Harvard Business Review blog titled "Bring Back the Organizational Man." In this piece, Dr. Cappelli starts to build your argument for you that "just-in-time" hiring is not going to work in the future. Specifically he states the following:

"There certainly are complaints here as well about the difficulty finding the right candidates, but the narrative is quite different. Here the story is about getting a "just-in-time" workforce, finding the precise workers we need just at the time we need them but letting them go when our needs change and then replacing them with new ones. It's a "plug 'n play" approach to the workforce, and it's not working that well. (In full disclosure, I wrote about this phenomenon in a book called Talent on Demand, describing how companies in the US have adopted this approach to talent management in order to deal with highly uncertain and volatile environments)."

You might recognize your organization as one of those "plug 'n play" organizations that Dr. Cappelli references. You do the work to identify people capabilities need...you know what current workforce capacity is, so you know where you have talent gaps needed to enable and execute the business strategy. But as Dr. Cappelli states...the organization makes investments in talent acquisition and many respects going after the same talent that every other organization is after. Dr. Cappelli takes note of that as well by pointing out the following:

"All that would be ok except that employers are finding it difficult to hire the skills they need. The supply of skills in specific areas is uncertain, so the quality and price jumps around a lot. Some jobs require skills or at least sets of skills that are unusual, and finding a good fit outside is very difficult. Skills that one learns through training become scarce because few employers train."

So understanding these perspectives allows us to reframe the conversation based upon what is happening in our organizations. Part of that reframing is specifically focused upon communicating what the costs of turnover are and the performance gap between internal promotions and external hires.

If you are like most organizations, your turnover could be any where across the spectrum of low, medium or high. In some organizations, the pressure to acquire talent is high because you are hemorrhaging talent. But because we treat this as a one-for-one trade-off, organizational leadership doesn't necessarily account for the costs involved in turnover of internal talent. Enter Boris Groysberg and his book "Chasing Stars." In it Dr. Groysberg looks at turnover and aggregates academic research from various academic studies that looked at the issue. In looking at these studies (All referenced in the book for your review), Dr. Groysberg states that:

"Turnover is expensive. Researchers have estimated the cost of losing a seasoned professional as 75-150 percent of that person's annual salary."

So what does that look like? If you have a talented individual in your organization that leaves and that person has a salary of $200K...it will cost you $150K-$300K to replace them. That estimate includes a number of factors that for many organizations are difficult to calculate. For example, it includes the time to source, pre-screen, interview, onboard, loss of performance as the individual gets up-to-speed (To be discussed next), increased salary, and lost opportunity. Again...very difficult for organizations to quantify. That is why this research from Dr. Groysberg is so valuable for the business case.

But you might be wondering about the loss of performance...Research by Dr. Matthew Bidwell paints a different picture. In his article, "Paying More to Get Less : The Effects of External Hiring versus Internal Mobility" he looked at the performance of new hires versus internal promotes in a financial services firm. In his research he found the following highlights...

- External hires get paid 18% to 20% more than internal employees do for the same job.
- External hires get lower marks in performance reviews during their first two years on the job.
- External hires were 61% more likely to be laid off or fired from that position and 21% more likely than internal hires in similar positions to leave a job on their own accord.
- External hires tended to have more education and experience than internal workers, but those credentials didn't always result in strong performance—especially in a new company culture.

As Dr. Bidwell points out and supporting Dr. Cappelli's perspective..."External hiring has become more prevalent in the past three decades, especially in large organizations and for high-level positions. But he said that companies should spend more time figuring out how to promote from within."

These critical pieces to the business case justifying investment in a balance approach to talent acquisition & talent development are important when viewed in light of research by the Corporate Leadership Council in 2008. In that research addressing Employee Value Propositions and key factors that attract talent and influence talent to commit to the organization, it identifies seven key components:

Attraction - Compensation, Organizational Stability
Commitment - Manager Quality, Collegial Work Environment
Attraction and Commitment - Development Opportunities, Future Career Opportunities, Respect

Knowing that these drive attraction and commitment of talent to an organization...particularly Development Opportunities and Future Career Opportunities...allows the business case to develop more fully. By reframing the argument for balanced investment, we are able to communicate the importance of internal talent development, a focus on creating internal future career opportunities, the cost of turnover because of a lack of balanced investment in talent development, and that external hiring contributes to the cost of turnover. Making these critical connections paints a different picture and enables a much broader discussion to take place about the costs and benefits of renewed investment in talent development activities.

The ability of organizations to attract and gain the commitment of the most important talent will be important going forward as Dr. Cappelli points out. This is one of the reasons Deloitte made a $300M commitment in developing its new Deloitte University facility in Dallas, Texas.

All of this research taken separately doesn't allow for making the business case and initiating a conversation with leadership. But when combined in a powerful story and contextualized for your organization, it can allow you to build the business case for an informed approach. An approach that could be a key differentiation for your organization in executing your business strategy.

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader and Doctoral candidate at the University of Pennsylvania's Chief Learning Officer (CLO) program...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Google+, Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Google+: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the SAIC.

Maximizing Returns on Leadership...Competencies That Drive Growth

Greetings,

Many of us are looking for the magic answer to propelling our organization's business strategy. While we all recognize the importance of leadership and talent to that endeavor, we sometimes struggle to identify what we need to do to execute business strategy.

Research by the Corporate Leadership Council titled "Improving Returns on Leadership Investments" identified three places to focus on improving returns. This included:

1. Disconnected Strategy: Leadership Strategy is Not Integrated with Business Strategy
2. Misaligned Outcomes: Leadership Outcomes and Metrics Are Not Connected with Business Outcomes
3. Uncoordinated HR Activities: Leadership Activities are Not Integrated with Other HR Activities

At a high level...these are excellent approaches to improving returns on investment in leadership development activities. I have leveraged these approaches and still believe in their benefits in my new organization. These also align well with the Center for Creative Leadership's think piece on "Developing a Leadership Strategy."

Yet...while these high level pieces help align our thoughts...we have been missing something. What depth and breadth of leadership we need to drive growth?

Enter an interesting study from McKinsey&Company and Egon Zehnder, an executive search and consulting firm, titled "Return on Leadership - Competencies That Drive Growth." In the think piece, McKinsey and Egon Zehnder attempt to answer the following questions...

"There is little doubt that leadership quality is a key determinant of a company’s growth, but the specifics are frustratingly elusive. What matters more – analytics or people leadership? Is growth driven by a small group of stars or a broad leadership cadre? Should executives conform to one corporate leadership profile, or does diversity deliver faster growth?"

Leveraging McKinsey’s Granularity of Growth data from an extensive analysis of more than 750 leading companies worldwide and Egon Zehnder's leadership competency data in it's management appraisals, the report is able to identify areas of leadership development focus.

When companies in the bottom 25% and top 25% are compared against each other, those leaders in the top 25% are more highly rated in leadership competencies.

Specific areas from the think piece draw conclusions that are extremely relevant...

What this means is that companies can build leadership excellence in only a few selected competencies – and even then, this requires considerable time and investment. The companies with executives that excel at the competencies most relevant for growth therefore enjoy a significant competitive advantage that is difficult for others to replicate.

To generate growth, all companies need to build a critical mass of excellent leaders. Setting the bar high does not suffice but must be complemented with adaptations of business systems, talent management processes and high-impact capability building. Hence, companies should:

- ƒƒ Sharpen leadership development, by defining required competencies and skill levels for each job family and hierarchy level; anchoring critical competencies in all talent management processes, including recruiting, deployment, and assessment; and providing targeted support for the transition between senior management and top team roles given their differing skill sets.

-ƒƒ Innovate competency building, by building a “competency factory” to focus existing business processes and talent management practices on critical competencies; using “field and forum” approaches and “action learning” for sustainable change; and embedding leadership development in the company’s talent culture.

ƒ-ƒ Develop and promote “spiky” leaders by assessing the competency spikes of the current leadership team and talent bench; review the company’s existing leadership model and talent management practices for tolerance of spikes; and adapt the leadership model, talent practices, and internal communication to recognize the value added by the more unusual profiles. In addition, the utmost importance should be given to the composition of top and senior management teams. Our findings call for diverse teams with individuals of complementary leadership spikes.



These kinds of think pieces continue to point to the overall importance of leadership to organizational performance and success...but this starts to quantify in ways that can be explained to leaders in companies to drive investment decisions.

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Google+, Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Google+: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the SAIC.

Leadership Development - What's New is Really Old...

Greetings,

Leadership development is important...in fact...vital to our organizations ability to be successful. For those reasons we spend a lot of resources in money (Upwards of $10B annually), people and time in developing the current and future generations of leaders to fuel business strategies. If you have been involved in leadership development either as the leader and/or provider you have had the occasion to participate in what are considered some of the cutting edge leadership development techniques available to organizations to include:

Job Rotations
High Potential Programs
Management Training Programs
Management and Functional Leadership Tracks
Peer Assessments
Executive Candidate Assessment
Action Learning
Execution Education Programs
Coaching
Mentoring
Running Line Organization

There's only one problem...these aren't cutting edge. Sure maybe they are for you and your organization, but truth be told, all of these leadership development techniques have been around since the start of World War I.

In a piece from Wharton School Professor Peter Cappelli titled "What's Old is New Again: Managerial Talent in a Historical Context," Cappelli looked at the leadership development methods in context of evolving business needs and how our approach was much more complex pre-"lifetime employment" to today's approached. Specifically Cappelli states the following at the outset of the paper:

"We often think of the ‘‘traditional’’ process of management development in the United States as one that produced organization specific competencies, lifetime employment, and what has been described as a psychological/ social contract exchanging security (by the employer) for loyalty (from the employee). In fact this traditional model is a relatively recent, post-World War II development. By the end of the 20th century, most aspects of that model have been scaled back and some have been abandoned. What remains of the planning and development functions pales in comparison to the much more sophisticated models in place in the 1950s."

Some examples of where leadership development methods have evolved from include the following:

- Peer assessments started in the U.S. Navy during World War II
- Forced ranking systems started in the U.S. Army during World War II
- Executive Education like Harvard's Advanced Management program started in the 1940's.

This paragraph indicated that similar leadership development activities had been occurring for the last 50 years...

"The advice the authors of the Harvard Business Review study offered companies for developing their executives draws on the programs at companies like GE and seems remarkably similar to what is offered now 50 years later: rotational assignments, a mix of staff and line experiences, an opportunity to run an operation, attendance in advanced management programs, and psychological counseling or coaching (Janney, 1952)."

Now...there is no reason to throw all of this great work out and start over, but there is a realization that in the VUCA (volatile, Uncertain, Complex, Ambiguous) world that leader's development may need to shift from focusing on the individual leader...

That folks is the topic for my next blog...

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Google+, Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Google+: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the SAIC.

Global CEO Studies...A Broken Record

Greetings,

At the Davos World Economic Forum, PricewaterhouseCoopers unveiled the findings from their 2012 Global CEO Study.

I really like to look through these kinds of studies to get a sense of what CEOs and other C-Suite leaders are thinking. I am always particularly interested in what they see as talent and leadership challenges or priorities they want to address.

The PwC study is no different in that respect.

When asked "Have talent constraints impacted your company’s growth and profitability over the past 12 months in the following ways?" 1,258 CEOs responded with the following:

43% - Our talent-related expenses rose more than expected
31% - We weren’t able to innovate effectively
29% - We were unable to pursue a market opportunity
24% - We cancelled or delayed a key strategic initiative
24% - We couldn’t achieve growth forecasts in overseas markets
24% - We couldn’t achieve growth forecasts in the country where we are based
21% - Our production and/or service delivery quality standards fell

CEOs planned to attack these challenges primarily by three areas...

- We plan to move experienced employees from our home market to newer markets to circumvent skills shortages
- We plan to develop and promote most of our talent from within the company
- We plan to primarily recruit local talent wherever we have market needs

Additionally, not surprisingly, CEOs are looking for better information...this section of the report gives great insight that CEOs are looking for the right information to make informed decisions about their people/talent investments.

"CEOs are seeking a better understanding of the scale and effectiveness of their investments in talent. Productivity and labour costs remain important measurements; these are the tools investors, lenders and businesses use to benchmark progress (or lack of it). They are largely standardised in many industries, and thus easy to implement.

Yet for many CEOs, those tools aren’t enough. They’re very good at telling a CEO how the business is performing today relative to its peers, but not at indicating whether the organisation is investing enough in employees to generate future growth. Such measurements cannot isolate skills gaps, and struggle to identify the pivotal jobs that drive exponential value; they do not measure employee engagement or team performance, both of which are so critical for investments to foster innovation to bear fruit. These measurements are much harder to make, which is one reason why they’ve been neglected and why today, so many CEOs are frustrated with the issue of talent."

As my last post discussed...the people and talent challenges that many organizations face are very similar. That point continues to be driven home in CEO studies like this one from PwC. Year in and year out we see the same CEO perspectives...

If we were doing our jobs...would we continue to see these challenges over and over? Is the world we are in going to always be like this where our profession makes little progress in solving the problems that our leadership continues to see?

I recently had a discussion with HR professionals in an organization and the discussion turned towards business strategy. One person shared they didn't know or understand the business strategy in their organization...so let me be frank...if you don't understand your business strategy and how strategic people and talent capabilities support its success...you shouldn't be surprised to find the same things coming up over and over again...

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Google+, Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Google+: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the SAIC.

Creating Talent Champions...

Greetings,

I had a very interesting conversation this past week with a Senior Vice President of Talent at a Fortune 500 company. The intent of the conversation was to get a good understanding of how their organization developed talent and integrated it into the overall strategy of the organization. We focused on leadership development specifically during our conversation, but it was obvious that this organization's culture had the concept of talent and development embedded in its DNA.

As I reflected on that conversation this weekend, it became apparent that this organization didn't get to this point overnight. It is unlikely that it started with Talent Champions, but over time has created them and ingrained it into their culture.

The key for organizations in this new talent war is to create Talent Champions. In this new war for talent it is not just a Human Resources (HR)/Human Capital Management (HCM) or a line responsibility. It is a shared responsibility

Why is this important? Corporate Leadership Council research titled "Creating Talent Champions" explains...

"While few business leaders are Talent Champions, most business leaders have the skills necessary to become Talent Champions. HR’s role is not to develop a new set of skills in business leaders but instead to help business leaders apply their existing business skills to talent management. When accomplished, HR can improve business unit revenue by as much as 14%."

Additionally, CLC indicates that the HR/HCM-Line partnership accounts for 68% of talent management program effectiveness.

It is not about creating talent management programs for the sake of having talent management programs. They need to be connected to business strategy and positioned where line managers can leverage the programs to successfully meet their business needs. In many organizations, the partnership piece is missing. To get to that partnership requires healthy HR/HCM engagement. Leading and educating line managers that also helps build a climate and culture that creates talent that flourishes.

Our organization's success depends on it.

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the Department of Defense or the Defense Intelligence Agency.

Core, Common, Critical - Understanding Where to Invest Human Capital Development Resources

Whether you are human capital development resource heavy or light...knowing where to apply resources to have the biggest impact on organizational performance is a critical business skill for Human Capital Management (HCM) leaders. One approach to take is the defining of Core, Common, and Critical skills...

Whether your HCM governance structure for your organization is centralized, decentralized or federated...this approach can enable informed resource decisions and drive closer integration across aspects of the organization that may not have existed before.

To gain the buy-in of all parts of the organization involved...it is recommended that you determine the Core skills needed to achieve current and future business results. This not only gives you the HCM leader understanding of what the organisation is doing and why, you are better positioned to support it as an individual component. A key piece of this effort is to ensure that the findings are validated by the unit's leaders to ensure that the right skills are drawn out for it to succeed.

By conducting this with each individual unit within the organization...you are in a position to aggregate findings across the organization and identify those set of skills that are Common across the entire organization. While this is a great data point...it is not the complete answer.

After identifying these Common skills, you must work with organizational leadership to understand the business strategy and identify the Critical skills that will drive superior organizational performance and business results. By understanding what these Critical skills are, we are better prepared to measure their impact and make the right set of resource decisions.

While this process is not rocket science...it can be easily repeated to enable organizational and business success.

Nuff Said!

Cheers,
Keith

Twitter: JKeithDunbar
LinkedIn: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

The opinions or views expressed here are mine alone and do not represent the views of the Department of Defense or the Defense Intelligence Agency.

You Need a Leadership Capability Portfolio Manager...

Greetings,

So we know that the 2010 IBM Global CEO and CHRO studies identified that both groups believe that leadership and leadership development is important, but 2 of 3 CHROs didn't think their organizations were effective at doing it. Let's start to take a closer look at something that can help change that equation.

Learning can be directed in one of three areas based upon the Unit of Analysis. This is typically focused on individuals or teams, but it can also be at the organizational level. The linkage to today's blog is by taking this same approach in the management of the learning and in this case...focused on an organization's leadership capability.

Disclaimer - I am NOT a financial investments expert. That is why I pay for the service from the pros to help me manage my resources. So what I am about to say is my simplification in terms for today’s blog.

In the financial services sector, it is fairly well known that as individuals we can make investments in a number of different financial instruments like money markets, bonds, stocks, etc. Each of these involves a strategy to maximize the return on investment, but each carries a form of risk. Investment strategies are intended to develop a portfolio of financial instruments that can weather periods of volatility, uncertainty, complexity and ambiguity…like today’s global environment…for both short-term and long-term gains.

Now look at the investment your organization is making in leadership development. As discussed in previous blog posts, it is estimated that within the United States, that over $9.5 billion is invested in making leaders better. However, that investment is typically focused at the individual level. By investing in the individual’s leadership development, it is assumed we will reach a tipping point in the organization that will lead to maximizing the overall organizational leadership capability.

This doesn’t account for risk though. In the current global environment that is volatile, uncertain, complex and ambiguous…the VUCA environment plays havoc with the development of an organization’s overall leadership capability. In order to maximize short-term and long-term investments and returns on leadership development…a different approach is not only recommended, but required…that is portfolio management. Like a mutual fund manager, organizations need someone that can act as the Leadership Capability Portfolio Manager or LCPM.

To do this requires a strategic perspective by understanding the business strategy and the leadership capability needed to execute that strategy…so that is a no brainer. However, we know that most competency models that leadership development programs are based upon are focused on what leadership capability you need now and not building the kinds of leaders you need for future competitive advantage. Additionally, if you take a strengths-based approach to leadership development like me, you know that there are going to be some capabilities within your competency model that no matter how important they are…not everyone is or will be a 5 (On a 1-5 scale) in every competency. The law of diminishing returns kicks in and increased investment in developing a tactical execution focused leader into a strategic vision leader will be wasted.

Now enter the realm of the LCPM…Because this person or group in your organization understands the business strategy, HR/HC strategy, leadership competency model, future leadership needs to execute, etc. your team is better positioned to manage for risk in the leadership pipeline and make targeted investments in areas where more risk can be taken or areas where less risk is advisable. This approach also allows you to manage individuals as a true capability. For example, if you know that the business will need frontline leaders that are collaborative and with high emotional intelligence in the next 2-3 years and reduced change management because your future looks stable (OK…this is probably WAY unrealistic)…then you can afford to “divest” change management investment in the leadership development program in order to “invest” in more leader capability in collaboration and emotional intelligence.

Taking this approach shows a direct understanding of the business and future HR/HC needs o enable its continued success AND a prudent approach to human capital investment. So the only thing left is one question…

How are you managing your leadership pipeline?

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

The Holy Grail...Human Capital Development Aligned to Strategy...

For a long time our profession seems to have had an identity crisis. We wanted to be strategic business partners but we couldn't get there. IBM's 2009 report titled "Getting Smart About Your Workforce: Why Analytics Matter," showed key strategic human capital (HC) challenges that Human Capital Management (HCM) leaders face and their perception of importance vs. effectiveness in overcoming them to impact business results. One of those areas with a significant gap in importance vs. effectiveness (48% in last weeks graphic) was the definition of "knowledge, skills and capability requirements to execute business strategy."

In my honest opinion, the HCM leader's capability to act on this particular human capital challenge is more important than other importance-effectiveness gaps the report identified. Why? Because as HCM leaders...if we can't define organizational capability requirements (That is really what our customers want...not HR speak like knowledge, skills and competencies...we can do that internally) to execute the business strategy...we are in essence lost. No "seat at the table" is forthcoming. So we have to execute on this one human capital challenge gap with the agility and adaptability the organization requires to function in the global complexity. And we have to do it...flawlessly.

At the Defense Intelligence Agency, we faced a similar challenge as DIA merged with ten worldwide Combatant Command Directorates of Intelligence. Treating the merger as a major change management project as Combatant Command civilian employees were integrated within DIA, the DIA learning team decided that for a successful merger, we needed a simple approach. The approach was to define the individual Combatant Command capabilities that would allow the team to look at common, core, and critical capability requirements across the Combatant Commands.

Pioneered by Dr. Reza Sisakhti of Productivity Dynamics and used by successful companies like IBM, Cisco, and HP, we were able to focus on three mission critical job roles at the Combatant Commands to drive our efforts...Intelligence Analysts, Collection Managers and Intelligence Planners.

The process involved two simple steps...

1. Engage strategic leaders and determine each Combatant Command's mission, strategy, strategic initiatives in place or planned, and the challenges faced in executing the strategy.
2. Identify top performers in the organization. These top performers are top performers because they are able to overcome challenges and achieve results. What behaviors make them successful at executing the strategy and overcoming challenges?

With this data, the team was able to start alignment of available learning at DIA and at the Combatant Commands in direct support of mission strategy execution. From a change management perspective, ten Combatant Commands with different functional and geographic responsibilities were able to see the knowledge and skills necessary to execute their mission strategies for the three identified roles were the same. The only difference was the application of these human capital capabilities in their respective environments.

The decision to take this simple, but proven approach in a massive change effort was risky. But the payoff was a group of global learning professionals at the Combatant Commands and DIA that are considered the vanguards of enterprise integration by senior leaders within the Defense Intelligence Enterprise. It has ushered in a new level of collaboration and innovation that led to the team's recognition in 2009 by Chief Learning Officer Magazine with a Learning-in-Practice Gold award in Division I for Global Learning.

So the message this week HCM leaders...focus on defining knowledge, skills and capability requirements to execute business strategy and take a risk...it could lead to a huge payoff for your organization and HCM.

People Skills Key to Strategy Execution? CEOs Think So...

First, I want to wish everyone a Happy Memorial Day...please take time to remember why we get these opportunities in the United States.

Last week I discussed what I considered a "hidden message" in the IBM 2010 Global CEO Study - "Capitalizing on Complexity" because of the precipitous drop in CEO's view of the impact of People Skills as an external force which will have the biggest impact on their organizations. This week, I go deeper in to the study and the implications of CEO's thoughts and perspectives on strategic Human Capital Management (HCM).

While the thoughts of CEO's on the idea of creative leadership to deal with the complexity and ambiguity in their organizations got all the air play after the release of the study on 18 May, there are other parts of the study that provide a wealth of information on what your CEO is thinking that can help us shape approaches to HCM. One particular section is in the chapter discussing the reinvention of customer relationships. In the survey, IBM asked CEO's what was the most important dimension to realize their strategy in the next five years. What came out number one at 88% was "getting closer to customer." Makes sense...if you want to execute a strategy you will need to be closer to the customer to understand what is driving their most pressing challenges so you can develop solutions that help them overcome those challenges.

What came in second though is the important piece for me. With 81% of CEOs stating that People Skills are an important dimension to executing their strategy. So it presents a little dichotomy in that CEOs saw reduced importance as an external force having the biggest impact on their organizations, but they consider it the second most important to executing their strategies.

So the key opportunity for HCM leaders is having the ability to translate CEO strategy into clearly defined people knowledge and skills...something that is apparently not easy for our profession. In IBM's 2009 report titled "Getting Smart About Your Workforce: Why Analytics Matter," it surveyed Human Resource (HR) professionals. One of the key findings was the following:

"Defining the requisite knowledge, skills, and capability requirements needed for the execution of business strategy. Organizations must have a firm understanding of what skills and capabilities they have in-house, where gaps exist, and the best ways to fill those gaps through external hires or internal mobility."

The interesting piece from this study as evidenced by the graphic is HCM leaders understand the importance of identifying knowledge, skills, and capability requirements to execute business strategy...we are just not effective at it as represented by the 48% gap in importance vs. effectiveness. So when we compare data from these two studies...we find ourselves in a conundrum...

CEOs understand the importance of people skills to executing strategy as do we...but if we can't figure out a means to do it effectively we will become just another perceived resource drain on the organization.

All is not lost though. A number of organizations are really effective at defining necessary people skills to execute business strategy and develop the right sets of integrated human capital solutions. HP, Cisco, and IBM come to mind for me, as well as my own organization, the Defense Intelligence Agency (DIA). So we have organizations we can learn from and continue to show our own profession's skill in enabling business success.

In my next blog...we will go in to a Human Capital Development (HCD) model that can really start to shape your HCM ability to be effective in defining the necessary knowledge, skills and capability requirements to execute business strategy. Our profession depends on it!

Cheers,
Keith

Real-time Brand Management...Implications to Real-time Talent Acquisition

In John Sviokla's Harvard Business Review blog about the horrible Virgin America's flight on March 13, he discusses the power of real-time brand management. This was driven by one passenger, David Martin, the CEO of Kontain.com creating a perfect storm around the incident.

During the four hours the plane was on the tarmac in Newburgh, NY, he documented and shared it with the world. This led to Martin negotiating on behalf of the other passengers a full refund and $100 voucher (Virgin America's CEO C. David Cush originally only offered the $100 voucher).

So that is the sordid story of the flight and passengers...The interesting part is Sviokla's statement below...

"Firms may "own" their brands, but brands really live in the heads of their consumers. Companies must constantly nurture and actively manage their brands at the speed customers form opinions about them."

In a world so globally connected at mind numbing speeds, implications of these type of incidents is "real-time" and can have a major impact on the bottomline for a company if it does not act quickly to address it...just ask Toyota.

While there are no studies, I suspect that these type of incidents also have an impact on "Real-time Talent Acquisition." How many people with the right knowledge and skills to help execute Virgin America's business strategy may have been thinking about joining the company and now are not? We will never know, but managing brand for talent acquisition can have similar short-term and long-term impact on an organization's growth, market share, etc.

Companies must manage their brands at the speed that talent, both inside and outside the organization, form opinions about them. CHCOs, CHROs, and CTOs must prepare to make adjustments in talent acquisition strategies at the same speed that these type of incidents occur for an organization. In the new talent war that is approaching...the ability for Human Capital Management leaders to be agile and adaptable in dealing with these types of incidents will be critical.

Signs of Economic Heating...A New Talent War Looming?

This week there were new signs that the economy is moving in the right direction. Great news for individuals, companies and the nation.

Those signs included a rise in the short-term interest rate by the Fed, durable good orders showed an increase over the last reporting period and consumer prices continue to be flat. These signs together and statements from the Fed that growth is currently more important that inflationary issues continues to bode well for the U.S. economy.

While these events transpired this week in economic news, this blog post from the American Society for Training and Development (ASTD) shows what may be looming for companies not just in the U.S., but globally. In the blog is reference to a Halifax Chamber of Commerce brief by the Nova Scotia Labour Minister Marilyn More. During her discussion she states the labour force will shrink by 18,500 jobs in 2014 and over 40,000 Baby Boomers are expected to retire leading to a significant labour shortage in Nova Scotia.

While this is not news to the Human Capital realm, we have been expecting this for sometime now, it has just been postponed by the current economic conditions, Ms. More states:

"...38% of the current workforce is undereducated and lacks the skills to move forward in a knowledge-based economy."

What is occurring in Nova Scotia is a microcosm of the larger human capital condition across the globe and the important understanding that as the economy does turn around in the U.S. and globally that a new talent war is looming. As the economy heats up and organizations move to develop new human capital capabilities to execute the business strategy...they will need talented and skilled knowledge workers to enable their business strategy. What this report indicates is that the available labor force may not be prepared with the right knowledge, skills and experiences to support the organization's business strategy.

Understanding these dynamics now will lead to organizations being either successful Talent Keepers and Talent Acquirers or net Talent Losers. It may be too soon to say how this will pan out as job creation is slowly increasing. There is potentially pent-up frustration in the workforce in many companies. Those that would have left found fewer jobs available to move to and those that would have stayed may not be happy with how downsizing affected them directly. If those factors are in your workforce (Annual workforce engagement and climate surveys will shed light here), preparing for the implications of a new talent war now is critical.

Human Capital leaders are in a unique position. As discussed in my last blog post, there is immense cash liquidity in organizations because that allowed flexibility. Companies are poised to make key decisions on whether to buy new talent (hiring or M&A), develop talent, or rent talent. Human Capital leaders can make recommendations to support these critical decisions, but not without:

1. The requisite human capital analytics

2. Understanding of the business environment

3. Knowing the required human capital capabilities to execute the business strategy

Understanding these three critical components of the organization will allow for decision advantage when it comes to human capital. Human capital decision advantage will make you and your organization a Talent Keeper/Acquirer and not a Talent Loser as the economy continues to get on track.

Cheers,

Keith