How Top Companies Manage Talent Development

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Han van der Pool – TNT N.V.
Lex Lindeman – HRBoosters

Globalization, demographic developments, the credit crisis and global warming have all created the need for a shift in strategic management. Organizations are now faced with the need for continuous adaptation to changes in the markets and the world in general.  Leadership is the most important condition for success in organizations.  Organizations which treat development of executives and managers as an integrated part of company strategy have a distinct advantage over those that do not manage leadership development actively.

Together with Dave Ulrich of the RBL Group, Hewitt Associates examined how successful companies structure their management development practices and identify and develop their current and potential future managers and leaders. This research is carried out once every two years, and the outcome and the rankings were published in Fortune Magazine in November, 2009.

A closer look at the research shows a nice overview of the practice of leadership development and the importance which global companies attach to it. The inventory of the programs and instruments used by an array of companies operating globally was compared with the financial results of those companies, and gives some insight into the most effective approaches. The “Top Companies for Leaders” are the most advanced in talent management and leadership development, and have a real leadership culture, according to the researchers.

Over five hundred companies have taken part in this research. Every company completed an exhaustive questionnaire, which was analyzed and compared to other companies by the researchers. Afterwards, a selected group of companies was more closely studied through interviews with HR professionals and top managers.  To see profiles of the Top Ten, click here.

Main Conclusions
The research shows clearly that successful companies continue to invest in leadership development despite the economic situation and the enormous strategic issues which companies face. Here is an overview of the most important elements which make a difference at “Top Companies for Leaders.”

  • Strategy – There is a clear link between the strategy of the company and the strategy of leadership development. Successful organizations closely examine which talent programs are needed and which interventions are necessary to realize their company strategy.
  • Involvement – The responsibility of talent development lies at the top of the organization, and top management is also actively involved in the development of future management. The top managers themselves are frequently active as mentors, coaches or trainers, and frequently share their experiences and insights. Often the CEO plays a prominent, active role in training or action learning, i.e., using high potentials coupled with experienced leaders on essential questions. Also, CEO’s are involved in the programs by means of internal communication.
  • Talent Pipeline – Talent development is considered as a “mission-critical” company process. The best performing companies see the filling of the talent pipeline organization-wide as a necessity. They use sharp definitions of talent (high potentials), measurable criteria and a rigorous process for to determine who belongs in the talent pool and who does not. The outcomes of this are measured with KPIs.
  • Ongoing Processes – The Top Companies for Leaders have incorporated management development in their business cycles. The companies think about ongoing, recurring development processes instead of one-time initiatives. Talent management has a high priority in these organizations. Much attention is given to identifying high potentials, determination of specific career paths for these high potentials, coaching and their active contribution to training and development programs. High potentials are assisted in their development by means of training, e-learning, coaching and job rotation, as well as action learning. Thanks to this approach, leadership and company development evolve continuously together.
  • Behavior – In these Top Companies, leaders are significantly more aware of which behavior is expected of them. This also becomes apparent in all aspects of the organization: performance management (leaders are rewarded for the degree desired behaviors are demonstrated), promotion decisions (people are only promoted when the desired behaviors are shown), recruitment and selection (leadership behavior is an essential selection criterion) and communication from the top of the organization.
  • Critical Objective – High potential talent is considered as a strategic advantage and the development of this talent is and the development of a robust talent pipeline is considered a critical objective for the organization’s top management.
  • Leadership Programs – Only leadership programs with high added value for talent development are organized.  Programs whose content is linked with organizational needs are chosen.  The leadership programs are fully integrated with other human resources processes, such as performance management, promotion policy, training and development, reward, succession and career planning,and are coordinated from one central point in HR.
  • Implementation – Leadership is a mindset.  It is included in the day-to-day of the business.  The Top Companies distinguish themselves by making talent management a regular part of operational management. All the leaders of the company are responsible for managing talent within the organization. Also, they are responsible for continuing the implementation of talent management in the organization. This infrastructure is embedded in the daily leadership culture and managers develop the necessary competencies to be able execute talent management effectively.

Author’s Observations
Based on the findings of the Hewitt/RBL Study, we at Human Resources Boosters have developed a model to achieve excellence in integrated talent management. This model comes in three phases:

  1. Structure – Companies should introduce functional profiles, competency models, describe paths for growth, implement a yearly performance management cycle with clear achievable targets and incentive structures, career- and succession planning and the maintenance of this system (talent management infrastructure).
  2. Process – Companies should embed talent management in the organization. The total infrastructure should be part of the day-to-day leadership culture. Managers should develop coaching and training skills and experience to be able to execute talent management effectively.
  3. Selective Development – Successful organizations closely examine which talent programs they need and which interventions are necessary to realize the company strategy. Examples of selective development are tailor made leadership programs, management development initiatives like inter-company exchange of talent, market and product oriented development, etc.

Hewitt showed with this research that companies, even in time of great uncertainty, are able to counter market and economical challenges by maintaining or even increasing efforts in talent management. Most of the companies even invested anti-cyclic, i.e.,  when markets were relatively calm companies invested more time and resources in people development. This also anticipates better times.

When talent development is really embedded in the organization and seen as an ongoing rhythm, the total processes in an organization will not only run more smoothly, but also more effectively, generating shareholder and stakeholder value. To become a top listed company may be a bridge too far for some organizations.  However, with relatively simple actions, some investments, and strong convictions that people development should be part of your routine activities, your company will develop in a sustainable way.

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11 responses to “How Top Companies Manage Talent Development

  1. Pingback: How Top Companies Manage Talent Development « International HR Forum :

  2. Emmanuel Owusu

    Clearly, benefits of Management development are enormous. But one notable frustration among third world countries is the high cost of development (time and financial) exacerbated by high staff turnover resulting from talent poaching.

  3. 100% agree everything is about people development is a key to garantee companies long term sustainability but the first step is to make sure to have on board right people and to capability to retain them….

    What about african companies (I am not refering to multinationals operating in Africa) where people developement program is perceived as an expenses an not an investment ?

  4. I think Incubators can take a lead from this article. While Incubation must support the growth of small businesses, the real value in the business lies in the owners. Every successful entrepreneur has experienced failure, but it is their drive and determination that gets them up off the floor and into their next enterprise. So considerable attention needs to be given to their development – their leadership ability and their management skills.

  5. As ever, an interesting article, but really it doesn’t teach us anything new. It is not rocket science to understand that an applied focus of the right development for budding talent will help improve the fortunes of an organization somewhere down the line.

    All the steps and phases make sense, as they always seem to. The research just tells us “hey, do what these guys do and you’ll be successful too”. But therein lays the real requirement. How do you convince the senior management teams of those companies who have grown up out of sheer perseverance, 70hr weeks and bull-like drive, that embedding talent management process and pragmatic management development solutions, with recurring interventions is going to make them more successful?

    It’s often, when things are starting to go seriously wrong or there is nowhere else to turn for profitability that business start to consider these expensive, soft psychology approaches.

    I say enough with the research on what needs to be implemented and let’s do more to understand how to convert thinking more effectively, so that we can actually implement the research!

    I personally use case studies which are “return on investment” focused, that look at everyday companies and how their fortunes are being changed (not the corporate giants which often feel like a different beast altogether). I use examples from clients of where things were going wrong for them (often lots of little everyday things) and the accumulated cost of these errors.

    My aim here is to get the client thinking about their own business and seeing many of the same issues as my other clients are facing. At this point they begin to take an interest in talking through how to address it.

    The challenge really is in creating a strong enough desire to want to take action in the first place.

    @lansana – People development is an expense, at first. There is no getting away from the fact that you have to pay out cash up front and reap the rewards later. The problem comes because, whoever is trying to convince the person who says yes or no to spending the cash, is unable to create the understanding of the existing problem and the consequences of not doing something about it.

    My approach here would be to use a combination of coaching and feedback with the senior decision makers. Help to get them deciding that there is a problem and that it is due to a lack of skill or effective behavior. If they see it for themselves and own the problem, they are much more likely to instigate work on finding a solution.

    The next challenge is to identify how to create a solution that will demonstrate a return on the money invested. There are lots of ways to do this, through project work and performance improvement challenges. The key with these is the continued focus and input from the senior team and the relentless drive to raise the standards.
    The key is in selling it to the senior decision makers so they see it for themselves.

    Andy Hughes – Developing People, Improving Business, Having Fun

  6. Pingback: 4/15/10: Top Talent Development Posts this Week

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  10. Nowaday, talent development is very important for every company.

  11. Pingback: International HR Forum Best of 2011 | International HR Forum

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