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What Top Organizations Are Doing About Talent Management

After years of lip service, talent management is now a high priority for senior executives. This shift is not hard to understand, given the growing recognition that the only lasting competitive advantage an organization has is the quality of its people. But with the increasing emphasis on finding and developing the right talent to drive current and future business success comes the inevitable question: What’s the right way to approach talent management?

To find out what top organizations are doing, DDI analyzed survey data collected at the 2005, 2006, and 2007 Conference Board Talent Management Strategies Conferences. The survey was distributed to attendees to gather information about different aspects of talent management in their organizations. The audience was predominantly senior-level human resources executives and professionals. The companies ranged in size from less than 1,000 employees to more than 30,000. There were representatives from a wide range of industries, including pharmaceutical, IT, finance, insurance, education, and manufacturing.

Looking at data over three years, we have a snapshot of the changing state of talent management. Collected here is a summary of three of our six findings, which we updated using 2007 data.

FINDING 1: The state of talent management is one of disarray.

Surprisingly, while the majority of organizations have implemented the essential ingredients required for successful talent management, the usage of talent management has declined in the past two years, not risen. Companies are not aggressively closing the gap by adopting "best practices."

Specifically, the decline between 2005 and 2007 in “Early Identification of Leadership Potential” and the drastic drop in “Assessing Readiness for Promotional Placement” are causes for concern. Clearly identifying the “characteristics” (skills, knowledge, personality, etc.) required for successful performance, and then evaluating the candidate against those characteristics, must be at the heart of any talent management system. To not identify and evaluate the characteristics is akin to flying blind. Of course, adoption of a practice does not automatically equate to that practice being used effectively, as suggested by the level of satisfaction respondents have with their current talent management systems

As Figure 2 shows, overall satisfaction with talent management components is low across the board, hovering around the 30 percent level. Satisfaction with high-potential programs, coaching, and success profiles has declined. On the other hand, strategy execution, early identification of leadership potential, and assessing readiness for promotion show signs of improvement.

Facing low satisfaction with, and decreasing use of talent management initiatives, many companies are searching for answers. Figure 3 shows that about half of companies continue to seek outside help with their high-potential programs and coaching. Recently, the data reveals that more companies look outside for help with competency analysis, identification of leadership potential, and assessing readiness.

FINDING 2: High-profile executives are held in low regard.

When survey participants were asked about their perception of the strength of their own senior team (Figure 4), we see an increase in executive confidence, but still relatively low numbers as a whole. Specifically:

  • Few leaders are really effective at talent optimization. Experience has reinforced our belief that there is nothing more important than coaching and nurturing today’s talent to meet tomorrow’s business challenges.
  • One in three leaders continue to be ineffective in the area of self-insight and awareness. “Know thyself” is the very foundation of effective leadership, yet it is a foundation that leaders too often lack.
  • Nearly one-third of respondents find executives weak in terms of functioning as a cohesive team. Respecting differences and leveraging team members’ individual strengths are critical for strong senior team performance, and in turn, the organization’s performance, as well.

FINDING 3: University learning does not always make the grade.

As Figures 5 and 6 show, 90 percent of the survey respondents rely on academia to handle their executive development programs in 2007, up from about 85 percent in 2006. However, opinions of the efficacy of these programs are low, and on the decline, despite the $5,000 to $12,000 (or higher) price tags for participation.

While these findings are significant, we are not claiming that university programs are without merit—they should be viewed as part of the development mix. For example, business acumen, financial analysis, and functional skills (such as marketing and strategic planning) are areas where university programs can add value. But they may not be best equipped to deal with issues such as succession management, optimizing diversity, building future bench strength, and coming to grips with the challenges related to one’s own emotional intelligence. What’s more, many university offerings are still “generic” public programs, bucking a trend in which highly relevant and instantly applicable development has become the favored approach for preparing leaders to address challenges. Behind this trend is a belief that utilizing only one resource may not be the best approach to developing high-potential leaders.

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