Talent Management is quite the buzz word at the moment, therefore a lot of different people have different views on it. What is the reason for talent management being such a buzz word and real issue for organisations? The reason is the changing demographics of the workforce. There are a number of factors changing of our workforce, these are the shrinking pool of skilled labour (baby boomers retiring), changing family structures (change in the roles of men and women in the workplace), emergence of generation x and especially generation y, more diversity in the workplace and the increasing impact of technologies. When all these factors are combined a new way of managing talent is needed.
The traditional approach to talent management (illustrated below) which consisted of acquiring employees, employing them and retaining them, will not work in this day and age.
This approach was born out of the war for talent in the mid to late '90s and early '00s. This focus was, at the time, on getting employees in the door, and in general spending as much money as possible to keep them employed and retained. In fact the traditional approach is still somewhat the norm in a lot of organisations with a few variations.
A lot of organisations will use the traditional model and insert development, and feel that as a result they have a talent strategy. Development and the development of people is not a talent strategy in itself, development should be an outcome of a talent strategy or a solution deriving from an overall strategy.
This traditional or contemporary approach does not work for a number of reasons. Firstly it does not capture the hearts and minds of employees i.e. what’s important to them, secondly its focus is generally on acquiring, which is not a solution to retention, and thirdly it is predominantly salary driven therefore it can be easily matched by other employers, and finally and most importantly it is not at all linked to the business strategy. As it is not linked to business strategy this approach to talent management can exist independently of the business strategy within the cocoon of HR, which in turn leads to it becoming a more or less a tick the box exercise which does not provide return on investment.
In these times of scarce Human Resources, a new way of thinking for Talent Management is needed; an approach that is both innovative and linked to the business strategy of the organisation and that can contribute to the development, connection and deployment of the workforce which will contribute to the bottom line of growth.
Talent Management 2.0 – linking talent to business strategy.
This approach can be understood in 4 key phases.
- Talent strategy needs to be linked and be integral to business strategy and business objectives.
- Workforce segments need to be isolated, especially critical workforce segments.
- Focus needs to be on what critical talent cares about most, namely Development, Deployment and Connection.
- Talent management programmes (work life balance, benefits etc) need to be integrated as a comprehensive talent strategy.
While the jury is very much out as to whether HR is strategic to a business or a support function (we believe HR should, and must, be strategic to a business) it is vital that any talent management strategy is linked to the business. Human Resource functions and/or Organisational Development functions need to have a clear understanding of what the strategy of a business is before a talent strategy is formed. While this may seem obvious we are finding that this is not always the case.
Once the business strategy is defined and understood, the next step is to identify workforce segments.
Workforce Segmentation takes it cue from Marketing, and involves segmenting your workforce into different categories. The workforce should be segmented by their contribution to the revenue of your business, which means they must be linked to the value chain of your business. In short we are suggesting that segmentation of the workforce should take place by impact on the creation of organisational value.
Based on our research we have identified 4 segments: please see below.
Of the 4 segments, the most important are the critical workforce segments. These are defined as high skilled, highly trained, individuals who are and would be difficult to replace in the market, this segment drives a disproportionate amount of revenue growth of a business. This group has a direct impact on the value chain.
In the example below we illustrate the value chain of a pharmaceutical company. Using workforce segmentation we have identified the roles that are closest to the value chain and that have a direct impact on it. Below the dotted line we have our other workforce segments. These segments are important but they are not driving revenue directly to the business as much as our Critical workforce segments.
In the above diagram we have mapped all roles into their segments using our CWS decision matrix.
Critical Workforce Segments are directly linked to the value chain and responsible for driving most of the revenue for the business. Therefore, in our minds these are top talent. These are the groups that ones talent strategy should primarily focus on. Once you have esblished who the CWSs are you then need to address what their need is and what is important to them
There are 3 things important to them and they are:
- Development – helping them build the capabilities they need to achieve personal and business goals
- Deployment – providing them with experiences they need to perform to the full extent of their abilities
- Connection – focusing on ensuring that individuals interact and perform together
Once energy and time are focused on these, capability will be increased, commitment will be harnessed and alignment will take place which will all lead to increased performance in the right segments i.e. those that add most value to your business. See diagram below for framework.
It is important to remember that workforce segmentation is related to roles and not individuals in roles. Critical Workforce Segments are not the same as “A” players in an organisation. While
“ A” players are important they may not be necessarily directly linked to the value chain. For example using a lending department of a bank as an example, an “ A” player in HR is not as closely linked to the value chain as a “B” player in Credit. That is not to say that the “ A” player should not be developed however one needs to concentrate on the critical workforce segments to ensure that revenue is being maximised.
Critical Workforce Segmentation is a new approach and way of thinking about Talent Management. It is fundamentally different from segmenting your talent via high performers and high potentials. While that approach has its merits it doesn’t make a direct link to the business.
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