BUSINESS leaders and talent professionals have long intuitively known that investments in talent management drive business results. Yet while the positive effects of this investment are real, measuring the impact of talent management on business outcomes has proven elusive. Our recent findings illustrate that organisations with higher levels of talent management maturity tend to perform better on critical talent and business outcomes. Importantly, these findings hold true not only for global organisations but also for organisations in major emerging growth markets including India, China and Brazil.
Historical approaches to talent management—which see talent management as a collection of transactions or services (for example, paying people, conducting annual appraisals)—often fail to provide competitive advantage to today’s organisations. To be in a position to reap the benefits that talent management maturity offers, organisations globally and in emerging growth markets should instead view the talent experience as a networked, customisable system with individuals—and their relationship with the organisation—at the centre.
We recently examined the talent practises of a sample of organisations representative of Global 2000 (G2000) organisations1 and developed our Bersin by Deloitte Talent Management Maturity Model2 (see figure 1). We then compared that model to three specific growth markets (India, China and Brazil),3 analysing the business and talent results of organisations in all markets. We found that while the path to mature talent management may differ across markets, it can improve talent and business outcomes for all organisations.
As shown in figure 1, the vast majority of companies in all markets are low in maturity (levels 1 and 2) and are not realising the talent and business advantages of more mature talent management. Companies in these levels are primarily focussed on achieving excellence within individual talent management practises (for example, talent acquisition, performance management, learning and leadership development).
In contrast, high-maturity (levels 3 and 4) talent management organisations have better business and talent outcomes. These organisations tend to view talent as critical to their business-unit and corporate strategies and are intent on building a relationship with and an ecosystem for people to enable them to be successful. Therefore, these organisations do not limit their focus to basic talent management operational excellence. Instead, they build a talent experience that encourages a culture of growth, insight, understanding, engagement and communication.
Practically speaking, this means that high-maturity organisations intentionally design technology systems, processes and practises that all work together to enable employees to have the information, capabilities, behaviours and resources they need, when they need them. Further, these organisations are increasingly developing their capability to “listen at scale” to the feedback of employees, so that they can rapidly customise their approach to workers, the work itself, or the market.
Quantifying the benefits of talent management maturity
As part of our research, we analysed the relationship between talent management maturity and eight metrics4 (figure 2). For each outcome, organisations at higher levels of maturity—levels 3 and 4—are more likely to be in the top quartile of performance than their less mature peers (with two outcomes at equal levels of performance; see chart footnote for more details).
Our data indicate that, in any geography, organisations can improve talent management maturity by focussing on seven areas of talent management, using a three-step approach7 (figure 3). We will first share an overview of this three-step process before diving into how it can be used in each geography (India, China and Brazil).
In each step, we identified the talent practises on which organisations should focus.8 To determine these practises, we analysed the 128 different dimensions in our survey, analysing which drive business and talent outcomes and then used regression and factor analysis to understand the order and grouping of the dimensions. Based on this analysis, seven talent activities showed the strongest correlations with positive business and talent outcomes. We arranged these into the three steps based on each activities’ power to predict outcomes (moving from least to most predictive) and the order in which organisations tend to approach them, based on our interviews. While the resulting three-step approach may seem intuitive, it is powerful in that it clearly delineates the order in which organisations should approach evolving talent management and which activities they should tackle at the same time (for example, leadership and learning) versus separately (performance management).
At a high level, the three-step process (see figure 3) suggests that organisations should first strengthen foundational talent management practises, as these activities enable them to meet their most basic of talent needs: consistently and effectively acquiring, managing and appraising (and thus compensating and retaining) talent. These activities also lay the groundwork for more sophisticated, seamless and customisable practises.
Second, organisations should focus on creating talent strategies,11 which enable them to determine where to invest resources. This is an important focus area, as our research12 indicates that this is the linchpin for moving out of lower maturity levels into higher levels of maturity. By going through the process of setting a talent strategy, HR organisations can create alignment with overall business objectives, prioritise talent management investments and reduce redundant efforts across business units or functions.
Once the foundation is strengthened and a talent strategy is set, organisations should begin to invest in activities that enable the creation of a personalised, networked and seamless talent experience. Based on our model, we have identified three areas below that are typically the most predictive of talent management maturity. That said, given their specific talent strategies, individual organisations may find just one or two areas—or even activities within each area—that they should prioritise.
It is important to clarify what we mean when we refer to the specific activities in the three-step process and why we focus on each of them. In figure 4 (below), we have defined each of these talent practises and their potential impacts on critical talent and business outcomes.
It is critical to note the importance of the last two activities, which are both related to diversity and inclusion (D&I). Our research found that D&I is actually composed of two distinct factors, strategic D&I and embedded D&I, which we found to be the two most predictive factors of high talent management maturity. In practise, it is unlikely that any company would address these two factors independently; however, there are subtle differences worth noting:
All of the talent management practises listed in figure 4 touch on activities that are at the heart of employees’ talent experience. This experience should enable employees to see how they can grow with the organisation, provide them with appropriate information to make career decisions, and create an open and inclusive environment in which the organisation hears, respects and values them. These are activities that should not be siloed but should instead blend together seamlessly and can, in many instances, be customised for each employee’s needs.
While all these practises are important for enhancing talent management within the organisation, it is key to remember that the priorities vary by geography, as discussed in the following section.
Given the breadth of areas to focus on within talent management, it is important to understand where organisations in specific growth markets excel and where they can get the greatest benefit from investing. Figure 5 provides a high-level comparison of the seven practises of talent management maturity, across G2000 organisations and growth markets.
While there are similarities across markets, it is important to realise that the way these play out in each market may differ. For example, all markets struggle to address diversity and inclusion (even though we found it to be the largest predictor of talent management maturity), resulting in us recommending that all organisations focus on this topic intently. However, the context of D&I varies across markets given their different cultures, which means the approach will also vary.
Figure 6 explores the identified strengths and opportunities for each market. Let’s start with the good news: Perhaps most interestingly, despite well-documented concerns with talent acquisition, our findings consistently indicated this is an area in which companies in growth markets tend to excel. Given talent markets’ competitiveness in these countries, it is unsurprising that companies have had to improve their talent acquisition effectiveness. The challenge—as the following sections examine—is retaining and developing that talent. This is where organisations can especially focus on creating a networked, personalised and seamless talent experience.
India is a market of opportunity, competition and complexity. But despite rapid workforce growth, employees’ technical and leadership skills are often limited, creating an imbalance between labour supply and demand. Many Indian companies and Western-based multinational firms fish in the same talent pool, contributing to rising employee expectations and demands for not only better compensation but an employee experience that enables them to constantly grow and take on new roles with increasingly greater impact. As figure 7 illustrates, India tends to have a higher percentage of organisations at level 2 maturity but is on par with G2000 organisations at level 4.
Indian organisations tend to excel at offering performance management processes, policies and systems that are perceived to be fair and consistent (68 per cent of organisations are effective to a great or moderate extent, compared to 60 per cent in the G2000). This provides Indian organisations with a solid base on which to build.
Many organisations are evolving performance management so managers have more frequent conversations, which can help in personalising the talent experience. However, this shift often comes with less documentation. Organisations doing this in the Indian context may need to supplement this approach by continuing to maintain or even enhance performance processes that emphasise transparency and fairness. Communicating extensively on how compensation and promotions are determined is one way to help improve transparency. Further, these organisations may want to continuously assess employees’ perceptions of fairness via real-time feedback (for example, pulse surveys or anonymous feedback) and then communicate clearly how they are addressing these needs.
Our data indicates that Indian organisations currently tend to have a clear talent strategy (36 per cent of organisations are effective to a great or moderate extent, compared to 24 per cent in the G2000). However, deeper analysis found that strategy is often focussed on foundational talent activities. To reach higher levels of maturity, Indian organisations should create a talent strategy that invests in establishing a greater level of understanding and responsiveness to talent throughout the organisation, paying particular attention to those employees in critical talent segments.
Our analysis found that while most Indian organisations excel at formal skills-based training, they have an opportunity to create an environment in which leader growth and learning is encouraged informally as well. In particular, Indian organisations should invest in blending leadership development with other talent management activities (for example, connecting leadership competencies with the talent acquisition process, integrating D&I concepts into leadership development programmes and linking leader growth opportunities to succession management plans). Further, Indian organisations should take care to create an environment that encourages learning—even if it means failing initially—throughout all levels. To that end, Indian organisations should analyse their incentive systems to determine how to encourage learning. For example, performance appraisals may take into account the type of effort or the amount of learning someone completes, not just whether that person hit her goals.
In addition, our findings reveal that though many Indian organisations do well at establishing a systemic relationship with employees compared to G2000 organisations (55 per cent compared to 37 per cent, respectively), opportunities for improvement likely also exist, especially when it comes to responding to employees.
Finally, our research shows that though Indian organisations reported their D&I activities are more integrated and strategic than in G2000 organisations, there is room for improvement. Specifically, 26 per cent of responding organisations indicated they significantly or seamlessly embed D&I, while 42 per cent reported they strategically address D&I (compared to 17 per cent and 26 per cent of G2000 organisations, respectively). However, a closer look revealed that Indian organisations’ D&I efforts tend to be smaller in scale and focussed primarily on women. This limited focus is different from many G2000 organisations’ wide breadth of D&I initiatives and populations. Indian organisations have an opportunity to continue to invest in their D&I efforts for women while expanding their focus to other populations that are critical to engage and retain to meet their business needs.
Figure 8. Call to action for Indian organisations
Based on our findings, organisations operating in India should consider:
Citigroup is a leading global bank, headquartered in New York, that has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. In the third quarter of 2016, Citi reported net profit of $3.8 billion on revenues of $17.8 billion.13 Citi India, headquartered in Mumbai, Maharashtra, is a subsidiary with more than 10,000 employees.14
In this era of globalisation and an increasingly competitive business environment, Citi realises the importance of building a robust talent pipeline able to continuously innovate. With that purpose in mind, the company developed a holistic approach towards honing its talent pipeline and building leadership capabilities in its employees that focussed on four critical areas:
Focus on campus talent. Citi recognised the need to continuously engage with local campuses to identify and tap high-potential talent through events such as its Innovation Challenge, case-based workshops and course integrations. During the last two decades, Citi India has built a long-term relationship with many of India’s top universities via engagement sessions held throughout the year that involve Citi senior leaders and local alumni.
Focus on networking. Networking and teamwork form an integral part of learning at Citi. All Citi associates go through a regional/global training programme lasting two to six weeks. All networking programmes were designed to build new hires’ awareness of the franchise, products and clients via leader sessions, group learning and simulations.
Focus on management education. Citi leadership stresses the importance of management education to help build management skills, savviness and a holistic perspective of business. The company’s Indian School of Business (ISB) scholarship programme gives high-potential analysts (recent graduates) an opportunity to pursue further studies at an ISB MBA programme. Upon completion of this programme and equipped with a post-graduation degree, these analysts develop readiness to take on more challenging and strategic roles across Citi businesses.
Focus on diversity. Citi’s journey towards building a future-ready organisation gained momentum and direction with the launch of its Citi Woman Leader Award programme, aimed at increasing gender diversity in the management associate programme and building a diverse talent pipeline in the organisation. The focus is on providing career management through formal learning structures in the form of mentoring, training and networking. In addition, Citi’s diversity policies include flex maternity, flex work arrangements, a coaching programme for mothers returning to the workplace and various leadership programmes for emerging female talent. These initiatives have all helped to decrease attrition of female talent as they move through their careers.
As China shifts its economy from a reliance on low-skilled manufacturing to higher-end services and knowledge-based industries,15 Chinese companies face a critical need to invest in talent management. Despite China’s large population, the demand for talent exceeds supply given a shortage of skills and experience, particularly for mid-level managerial and leadership roles. This shortfall likely results from an ageing population and shrinking workforce, as well as the more recent brain drain to Western companies. As figure 9 illustrates, Chinese organisations tend to be low in talent management maturity and will need substantial investments to effectively address some of their talent challenges.
The most critical focus areas for Chinese organisations are the implementation and communication of fair talent policies and procedures and a focus on improving the quality of performance conversations between managers and employees. Just 34 per cent of Chinese organisations told us they are effective at this to a great or moderate extent, compared to 60 per cent in the G2000.
To help improve perception of fairness, Chinese organisations should increase the transparency of promotion criteria and ensure they are followed when promotion decisions are made. Further, Chinese organisations should equip managers to effectively provide observation-based feedback that is customised and appropriate for each individual. Specific potential activities could include leaders proactively creating an environment in which it is seen as “safe” to give feedback (senior leaders’ communicating about and role modelling the importance of feedback can help) and adjusting the organisation’s incentive systems (for example, compensation, promotion criteria, or social expectations) to reinforce the importance of giving and receiving feedback. Finally, Chinese organisations may want to start by allowing anonymous feedback that is delivered privately, so as to enable employees to give and receive feedback but do so in a way that does not require them to “save face.”16
Chinese organisations are less likely than other emerging markets to have a well-developed talent strategy (19 per cent of organisations are effective to a great or moderate extent, compared to 24 per cent for G2000 organisations and 36 per cent and 34 per cent for India and Brazil, respectively). Therefore, they should create talent strategies that continue to focus on foundational aspects of talent management but also help create relationships with talent, particularly with those in critical segments or groups that have been difficult to attract, retain and engage (for example, women or Millennials).
Chinese organisations in particular may benefit from investing in workforce planning and talent analytics to support the process of setting a talent strategy. Because talent strategies often require an investment in a particular subset of the employee population, which could impact group harmony (a concept highly valued in Chinese culture17), it is important for HR and business leaders to illustrate the reasoning behind these investments. Using data to make strategy decisions may make it easier to explain the underlying logic. In addition, the use of data and analytics may help HR leaders to better understand their organisations’ formal and informal networks and to design strategies and approaches to improve or enhance them.
Our research identified that Chinese organisations should also focus on evolving their culture of learning and leadership, with only 32 per cent of surveyed organisations effective at this (compared to 46 per cent in the global benchmark). Chinese organisations should start by developing the capabilities of front-line and mid-level managers, who are responsible for managing the vast majority of employees. Due to the focus within Chinese culture on collective success,18 this type of development will likely need to be designed to scale broadly across the organisation. Focussing within the culture on the broad need for continuous learning is critical, as this can give managers and direct reports “permission” to have conversations about learning and development and may encourage employees to take an active role in their development.
In addition, Chinese organisations should begin investing in a systemic relationship with talent. Unfortunately, Chinese organisations are generally less effective at this than G2000 organisations, with only 26 per cent of Chinese organisations effective at this (compared to 37 per cent in the global benchmark).
Finally, Chinese organisations should focus on their diversity and inclusion efforts, as they, similar to G2000 organisations, tend not to be very effective in this area. For example, only 31 per cent of Chinese organisations reported a focus on attracting people of diverse backgrounds. Organisations operating in China should especially focus on better attracting, engaging and developing women19 and Millennials20 as these two employee types tend not to feel well-supported in the workplace.
Figure 10. Call to action for Chinese organisations
Based on our findings, organisations operating in China should consider:
Before 2009, insurance company AIA China had no standard performance metrics. Because there was little link between pay and performance, employees did not receive the demonstrated benefits of a strong performance management system. To address this issue, the company designed a key performance indicator (KPI) pool, which identified success factors for each position and mapped positions to the company’s strategic goals. Employee expectations were similarly aligned to the KPIs.
At the same time, the company shifted its pay structure towards variable pay, including short- and long-term bonus components to reward high performers. To further align employee and company interests and increase employee engagement, AIA China also launched an employee share purchase plan. Taken together, these initiatives reinforced the company’s strong interest in changing the culture to emphasise performance. They also increased employee engagement from 20 per cent to 63 per cent, particularly among high performers. As a result, talent retention rose as sales agent turnover dropped to half the industry average. For these and other talent management reforms, the company has won recognition as a leading employer in the industry.
Political challenges and an economic downturn have changed the landscape dramatically for organisations operating within Brazil. To complicate matters, an ageing workforce, lack of investment in learning and leadership development and gaps in the education system have contributed to a shortage of qualified talent to fill available roles. Figure 11 illustrates that, similar to China, organisations in Brazil tend to struggle with creating a mature talent management environment.
Brazilian organisations tend to excel at talent acquisition (91 per cent are effective to a great or moderate extent, compared to 89 per cent in the G2000) but could continue to improve upon these practises.
Brazilian organisations should create partnerships with local education systems to help create and maintain a steady supply of entry-level talent; this can be done through apprenticeships and the continued, if not increased, use of internships. These practises can help round out deficiencies in the educational system and signal to potential candidates that the organisation values continued development. Brazilian employers can create a seamless talent experience for these populations by connecting the talent acquisition, learning and development, and career management practises for a single vision of how a prospective employee can join and grow with the organisation. This approach can create a competitive employee value proposition difficult for others to replicate.
In addition, Brazilian organisations’ performance management efforts should continue to evolve. Our analysis reveals that while Brazilian organisations may be proficient in appraising performance, few have mastered managing performance. Specifically, many managers are not engaging in performance conversations, nor are they held accountable for employee development.
Most Brazilian organisations we surveyed lack a clear talent strategy. Therefore, they should focus on creating business-aligned talent strategies that can, in particular, improve the leadership and learning culture of the organisation, and expand D&I initiatives in terms of scope and population (for example, beyond what is mandated by the government). Further, many Brazilian organisations view competency models as synonymous with talent strategies. These are not synonymous and the alignment of a competency model to organisational objectives, while important, is insufficient to address talent strategy development. To address this, HR leaders should focus on developing a talent strategy that identifies the most important talent priorities, given the organisation’s business objectives and existing talent gaps.
While Brazilian organisations typically excel at providing development to executive leaders, a large majority of front-line and middle managers and leaders are left without significant development and training. Therefore, a primary area of focus for Brazilian organisations should be improving the importance placed on leadership and learning throughout the organisation. To do so, Brazilian organisations should expand their perspective and definition of leadership to include those lower in the organisational hierarchy and offer those individuals a broader set of development opportunities. In addition, leadership development should be integrated with other talent management practises: integrating leadership competencies into the talent acquisition process, integrating D&I concepts into leadership development programmes and connecting leader growth opportunities to succession management plans.
Another area of focus is having a systemic relationship with talent.21 Though Brazilian organisations report approximately the same level of effectiveness as G2000 organisations (36 per cent vs. 37 per cent, respectively) there are opportunities for improvement. In general, Brazilian organisations should improve two-way communication between employees and their managers, colleagues, and the organisation more broadly about talent capabilities, needs and preferences. Further, Brazilian organisations should focus on improving the quality and breadth of their succession management conversations (only 40 per cent of surveyed Brazilian organisations indicated leaders have succession management discussions to a moderate or great extent, compared to 50 per cent in Global 2000 organisations).
Finally, like G2000 organisations, Brazilian organisations should focus on their diversity and inclusion efforts. Though Brazilian organisations reported their D&I activities were more integrated and strategic than G2000 organisations, analysis revealed that Brazilian organisations’ D&I efforts are typically smaller in scale and focussed primarily on government-mandated diversity standards. This limited focus is different from many G2000 organisations’ wide breadth of D&I initiatives and populations. Brazilian organisations have an opportunity to continue to invest in their compulsory D&I efforts, while expanding their focus to other populations that may be critical to their business needs.
Figure 12. Call to action for Brazilian organisations
Based on our findings, organisations operating in Brazil should consider:
A multinational corporation recognised that its Brazilian arm was continuing to navigate persistently difficult national economic conditions. A company source indicated that while production has declined, manufacturing capacity has remained flat. The decline in production has caused Brazilian manufacturers to reduce their workforce significantly, with many companies using the “3 for 1” approach—keeping one person in a position where three were needed previously.
Because of the external pressures on the company, several key obstacles were hindering its growth, including (1) difficulty promoting people, (2) generational conflicts among its workforce and (3) a lack of diversity, both cultural and gender. To meet these challenges head on, the organisation undertook a number of steps, including formally encouraging and facilitating cross-moves within the organisation, thereby ensuring the rotation of top talent across various business units. Employees are able to seek out greater opportunities within the company’s Brazilian arm as well as in those areas that enabled them to gain global exposure. This strategy emphasises the importance of top talent, gives these leaders greater visibility into the company’s inner workings and positions the organisation for future growth.
To focus further on employee development, the company revised its career management cycle to include additional points throughout the year during which feedback, goals and expectations could be discussed. Among the newly introduced steps are employee dialogues, midyear reviews and development conferences.
Last, the company undertook a series of initiatives to foster greater workplace diversity. Chief among those efforts was to place greater emphasis on both the training of female workers and the development of a more robust female talent pipeline. Through a combination of cultural and online training, the organisation sought to embrace its workforce’s diversity by encouraging the inclusion of women along with individuals from a broad range of cultures. This effort was implemented to bolster the company’s talent pipeline and foster greater retention across the workforce, particularly among the highest performers.
Thus far, the company has benefited tremendously from the changes it has implemented. The revised career management cycle has given HR greater visibility into the performance of talented and promising individuals, leading to higher retention rates. The encouragement of cross-functional moves has given employees greater autonomy over their careers, while encouraging them to pursue beneficial and comprehensive development opportunities within the organisation. Employee satisfaction has risen, too: Assuming ownership of one’s career has empowered employees to more openly and proactively voice concerns as well as seek fresh and challenging opportunities. The talent pipeline has grown increasingly robust through these changes, which should position the organisation to meet the challenging economic and automotive marketplace head on.
Employees are seeking a talent experience that traditional areas of talent management cannot create and yesterday’s approach to talent management will no longer effectively provide competitive advantage. A new approach is key—one that puts employees at the centre and creates a personalised, networked experience for them. Organisations that do this can increase their likelihood of performing strongly on other important talent and business outcomes. To do this, organisations in G2000 and emerging markets should continue to leverage foundational strengths, create business-aligned talent strategies and then invest in critical areas of talent management. However, leaders should also pay careful attention to the nuances of their relevant markets and implement changes accordingly.
For top executives and talent managers, our research poses a number of critical questions that can help leaders begin to address talent management maturity:
In conclusion, our research in India, China and Brazil has shown that a talent strategy mapped towards driving business results can deliver superior performance compared to one merely emphasising the effectiveness of talent management processes. This indicates that insights about the market in which organisations operate are critical in how an organisation addresses talent management. Companies with global operations should seek out business- and market-specific insights to customise their organisations’ generic talent strategy to local markets to be able to achieve the most value. Talent management matters and understanding what drives talent management maturity, and acting upon it appropriately, delivers better business results.