Talent management is distinct from human resources, in part, because it is the responsibility of leaders across the organisation rather than a discipline that can or should reside in just one department
Human Resources magazine constantly strives to bring its readers the highest quality information in the world of people management and business. As such, the magazine is introducing a number of new columns to keep readers up-to-date on some key areas for HR professionals. Given that nature of business and competition for talent is increasingly global, Executive HR will examine the latest issues for HR professionals at the organisation’s most senior levels. Every month, Allan Schweyer, executive director of The Human Capital Institute, a US-based membership organisation, think tank, and educational resource for HR and talent management professionals, will provide commentary on the latest global trends, challenges and solutions for HR professionals.
The new role of the HR leader
Talent management is distinct from human resources, in part, because it is the responsibility of leaders across the organisation rather than a discipline that can or should reside in just one department. Last month, 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, performance management and retention. Indeed, seven out of 20 CEOs interviewed said they spend more than half of their time on talent management, compared to only four who reported spending less than one-fifth of their time in those pursuits.
CEOs are paying attention to talent these days for two main reasons: first, over the past several decades, industry has been successful in ironing out many of the wrinkles in bringing products and services to market. Production efficiency 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. Even the most advanced products quickly become commodities today unless they offer a design or creative appeal beyond their practical purpose or functionality. Today, constant reinvention, innovation, design creativity and marketing prowess (through human talent) is 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 succession plans for leaders and those in other critical positions. Tighter governance rules in many countries mean that boards of directors and CEOs are held responsible for their decisions affecting the health and sustainability of the firm (much of which today rests on the quality and depth of its talent). Succession and workforce planning, especially, are areas in which leaders must focus due diligence.
For HR leaders, this is very good news. All 20 CEOs referenced in EIU/DDI study believe that HR should be responsible for “executing talent management strategy, being custodians of the talent management process and [providing] guidance and fresh thinking about talent management programs”. Nineteen of 20 said that their head of HR is part of their “inner circle” of executives, a key person they rely on to help differentiate the firm on the basis of superior workforce strategy.
This is a new and welcome development. After decades of hard work from the fields of personnel and HR, most organisations can now rely on and take for granted efficient and effective processes for payroll and benefits administration. However, HR has been a victim of its own success in creating repeatable, dependable administrative processes. Today, most firms outsource payroll and benefits administration and a growing number are opting to outsource HR in its entirety. To the extent that HR has succeeded in administration, it has generally failed so 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, marketing and operations counterparts, who, unlike HR, have for years aligned and integrated their work with the highest corporate goals and objectives.
The opportunity for HR leaders is tremendous. This is a golden opportunity for HR to move up the organisational and professional ladder. At the same time, it is a chance to re-brand the profession. For those involved in managing talent for competitive advantage, new titles and categories are vital. We should begin seeing more C-level human capital and talent management professionals heading highly skilled, business-focused teams in the coming years - categories that began emerging in the late 90s when the primacy of talent in organisations became widely understood for the first time. HR leaders should start this process by first gaining a solid understanding of their organisation’s business and then aligning their talent management initiatives toward achieving those goals.
By Allan Schweyer, executive director of The Human Capital Institute.
