Talent management as viable as ever

by 17 Mar 2009

Recent trends present HR with a golden opportunity to move up the organisational and professional ladder, writes Allan Schweyer

Talent management is distinct from human resources, in part because it is the respon sibility of leaders across the organisation rather than a discipline that can or should reside in just one department. In May 2006, a report from the Economist Intelligence Unit (EIU) and Development Dimensions International (DDI) suggested that CEOs from across industries and throughout much of the world are strong believers in taking direct, personal leadership in recruiting, mentoring, succession planning, talent development, per formance management, and retention.

Drivers of change

CEOs and boards of public companies are paying attention to talent today for two main reasons. First, there is little room otherwise to differentiate from their competitors. Production efficiencies and supply-chain management combined with globalisation have increased competition and reduced margins for most products and many services. The result is that products and processes that were once points of differentiation are now often indistinguishable from supplier to supplier. Today, intangibles – including constant reinven tion, innovation, design creativity, marketing prowess, and reputation (through human talent) – form the key sustainable advantage for knowledge economy organisations.

Investors and shareholders constitute the second driver. They, too, have become aware of the importance of hiring and keeping top performers, and of maintaining solid succes sion plans for leaders and those in other criti cal positions. In 2007, the EIU reported that “human capital risks” related to “loss of key personnel, skills shortages, and succession issues” had become the number-one risk to global business operations. Succession and workforce planning, especially, are areas that leaders must focus on and demonstrate due diligence.

HR implications

For HR leaders, this is very good news. All 20 CEOs referenced in the EIU/DDI study believe that HR should be responsible for “executing talent management strategy, being custodians of the talent management process and [pro viding] guidance and fresh thinking about tal ent management programs.”

Nineteen of the 20 said that their head of HR is part of their “inner circle” of executives – a key person they rely on to help differenti ate the firm on the basis of superior work force strategy. Indeed, the Human Capital Institute’s own poll of more than 600 HR man agers and executives in August 2007 and a further 1900 in September 2008 revealed that more than two-thirds of heads of HR report directly to the CEO.

This is a new and welcome development. HR is finally making headway in becoming a “strategic partner”. To the extent that HR has succeeded in administration, however, it has generally failed thus far at “strategy”. Now that CEOs are demanding workforce strategies, including innovative ways to compete, for and through, superior talent, the pressure is on HR leaders to perform like their finance, IT, mar keting, and operations counterparts, who, unlike HR, have for years aligned and integrat ed their work with the highest corporate goals and objectives. A “transformation” is neces sary but most HR leaders and non-HR leaders alike agree that generally the profession has not progressed as rapidly as needed.

The trends outlined above, along with new attitudes among senior executives, present a tremendous opening for HR leaders. This is a golden opportunity for HR to move up the organisational and professional ladder. Clearly, though, HR must change in order to respond to the business challenges con fronting organisations today. The art of human resources must quickly evolve into the art and science of human capital management, or tal ent management.

This article contains excerpts from Talent Management Technologies, 2009, by Allan Schweyer and Edward Newman, to be released in Spring 2009 by The Human Capital Institute Press. By Allan Schweyer, president of the Human Capital Institute