Organisational talent is a key strategic asset - the importance of people is no news flash. One of the great lessons of the human capital frenzy of the mid-late 90s must surely be the importance of not just aggressively winning employee mind-share but keeping it. And while many organisations are confident that the recent deflation in employee demand will recalibrate the traditional employer-employee relationship where employers had more control, enlightened companies are looking at the current recruitment â€˜downtimeâ€™ as breathing space to really assess their bench strength and strategically manage investment in talent.
This is one of the key findings of a wider survey and analysis of Talent Management in Financial Services, conducted by McEvoy Associates Signium International.
Irelandâ€™s financial services industry appears to be very much in step with the recognition of the talent management imperative with over 85 per cent of those surveyed strongly in agreement with the need to systematically manage a â€˜talent bankâ€™ of key people for strategic organisational development.
Who are organisational superstars and why is it important to identify and manage them?
Top performers exceed average performance by at least 25 per cent. In some industries the difference between the average and the best is as much as 1000 per cent. Top performers not only stand out in an organisational line-out, they often magnify what is best in a firm. They are widely acknowledged as individuals who infect teams of people with their passion and focus, driving others by example to achieve higher results and helping to lock down team loyalty and commitment.
This point is not lost on Irish firms with 90 per cent of the managing directors who participated in our study, strongly agreeing that this proposition is valid within their organisations. There is equally strong agreement that employers must treat â€˜superstarâ€™ executives, those who drive and deliver superior results on a consistent basis, in an exceptional and individualised way.
Why is it important?
Implementation of long-term corporate strategy: Organisations worldwide are faced with more demanding leadership requirements than ever in a hard and fast global environment. Finding the right team in the right formation is as important as plotting the course and fighting the right battles. A company having a very clear picture of their own talent pool at any point in time will know whether they already have the right people on board for their chosen strategy or at least what they need to do to get there. Worryingly perhaps, only 45 per cent of our Irish survey participants strongly agreed that they had a cadre of talented managers who would be in a position to attain the highest level of achievement within the organisation. Over 66 per cent agreed that there would be a real need to go to market to fill board positions. Happily however, 80 percent of this population agreed that there would still be a strong showing of internal candidates on any shortlist to replace key personnel, stressing the value of external benchmarking as a reason for running the slide rule over the pool of relevant talent.
Retention pure & simple?
Recent experience and lots of academic discussion has led us all to recognise that employees are loyal to their work, not their firm, with executives nominating â€˜progressionâ€™, â€˜feeling valuedâ€™ and â€˜learning opportunitiesâ€™ as key determinants in their decision to remain or not with their employer. Not surprisingly top performers magnify this sentiment; not satisfied to climb the mountainside only to rest on the plateau, the temptation to find and conquer new heights is very real and the avenues to explore this are still in reasonable supply, hiring downturn or not. Companies may be slowing recruitment activity, but according to our study, of the companies that cut recruitment activity in 2000 - 2002, many are still on the prowl for top talent to the extent that forty-two per cent have created targeted programmes to keep their best performers. Star performers with an eye on personal and professional development are almost always prepared to listen to a credible proposition. The current climate provides an extraordinary opportunity to attract and make investments in top talent.
So what is Irelandâ€™s financial services industry doing to retain and motivate its superstars? We looked at how organisations view their talent pool and how they translate their human capital vision into meaningful, workaday initiatives for their organisationsâ€™ superstars.
100 per cent of managing directors surveyed strongly agreed that there was a definite need to better manage a line-out of their organisationâ€™s best people and reported a strong desire to more actively and systematically identify and grow the talent pool. Over 90 per cent agreed strongly with the 80/20 proposition that 20 per cent of a firmâ€™s talent delivers 80 per cent of the results. 50 per cent of them would find it impossible to replace their leading light internally and 25 per cent said they would struggle to effectively replace him/her at all.
Looking at the options for the development of a talent management imperative, according to our participants themost favoured retention and development technique is action learning, through providing a person with â€˜intraplacementâ€™ roles and assignments; identifying development roles and â€˜stretch assignmentsâ€™ internally and deploying grade A personnel to them.
Over 60 per cent of managing directors see this type of exposure as the single most important means of keeping superstars motivated and on board, or as one MD put it â€˜if we donâ€™t place them (internally)â€¦ an outside firm willâ€™. This thesis is certainly validated by our experience with executive search candidates. For example, I met regularly with individuals who had been at the same firm for fifteen years, having held several internal roles and established themselves as a critical firm asset. Asked why they stay for so many years despite countless opportunities to go elsewhere, the response is consistent and often, categorical.
Much weight is attached by our respondents to high level â€˜face-timeâ€™; visibility and contact with the senior management team as a consequence of high level intra-placement assignments and project work. Not only do these â€˜stretch assignmentsâ€™ equip top calibre individuals with additional skills in a meaningful way, when properly choreographed with cross functional and high level lines of communication, the superstars are â€˜keeping the right companyâ€™, accessing key decision makers and being afforded the visibility and recognition that all superstars seem to desire!
Yet it is precisely these development opportunities that are the most difficult for organisations to orchestrate. According to discussions we have had with clients and executives themselves, a fear of failure and business risks with â€˜unknown quantitiesâ€™ are key constraints to the execution of the best intentions. There is wide consensus however, that companies can and must manage these risks to ensure that a control framework exists to effect intra-placements as and when appropriate. One CEO pointed to the importance of involving all line management in this process by setting specific metrics and rewards for people development initiatives.
Apart from the benefits of exciting and motivating high achievers, there are clear peripheral advantages of intra-placement initiatives. They facilitate the deployment of excellent people to areas of high return and areas with operational development needs. Moreover highly developed programmes enable HR and Senior Management to identify and distinguish between superstars and other categories of performers to aid overall employee development and training. Indeed some global organisations aggressively use similar techniques to identify low or non-performing employees as part of a strategy to manage out the weaker links and improve overall talent averages.
In addition to the initiatives above, participants were invited to rate other concepts and schemes to satisfy the appetites of their star performers. We found surprising and widely diverging perspectives on how Irish institutions reward their high potentials for continued exceptional performance. Asked to consider â€˜the superstarsâ€™ in their business, only 35 per cent of managing directors participating in our study see financial incentives (salary and/or bonuses) as a key means to keep the highest achievers in their organisations. Those who feel that a differentiation in financial rewards is important however are quite unequivocal with one HR Director commenting that there is a policy of preferential treatment for the top 10 per cent of performers at all levels, across the board. This type of reward system may seem to imply subjective favouritism and a one-dimensional commitment to retain and develop a select few. However there is significant evidence to suggest that making a clear differentiation in rewards for top and average performers has a powerful â€˜haloâ€™ effect. Arguably, rewarding the performance of valued workers is important to all employees in the same way as their good example and energy inspires a better team vibe.
Interestingly, the experience of the majority in our study seems to contradict some international thinking which has gained considerable currency in recent times. In its â€˜War for Talentâ€™ study, McKinsey & Co articulated how paying an additional 40 per cent to hire an A player could yield an overall return of 100 per cent or more in a single year and strongly advocates the concept of treating different people preferentially. Irish business leaders may well breath a sigh of relief in the knowledge that money has never consistently featured as a key retention tool in any employee surveys conducted in this market. Non-financial rewards as cited by our respondents certainly may be more in keeping with the times. A softening in the perception of available employment opportunities have caused many executives to recalibrate their values and become less inspired by monetary rewards. Money is nonetheless important, but maybe not to the eye-bulging degree proposed by McKinsey.
Companies identify other drivers, such as investing in executivesâ€™ continuing professional development as significantly more important as motivational tools. Over 60 per cent of managing directors surveyed see individual coaching/mentoring as a number two priority in top talent retention and many are directing their employee development investments toward high-potential employees in particular, through formal soft skills training, including participation in customised leadership workshops, individual mentoring and executive coaching.
Perks and benefits that help employees balance work and life are now well recognised as key to attracting, retaining and engaging talent. Professional development programmes, sabbatical opportunities, tele-working and flexitime are highlighted as demonstrably successful schemes.
Plenty of recent experience reminds us to look beyond company numbers and the quality of the management team is a key feature in any corporate strategy and stock price value proposition. In HR and human capital consulting we are fast embracing burgeoning concepts such as the formal measurement of human capital and Enterprise Risk Management which have very pragmatic investor-driven concepts at their core.
Clearly, by cultivating their own stars companies can avoid some recruitment costs, reduce the integration risks of new and unknown hires and possibly, succession plan all the way up to the top slot. Moreover, effective talent management strategies create a â€˜social contractâ€™ with all employees, giving life to sometimes symbolic commitments to people. These in turn can cultivate a cycle of attraction and retention for the best available talent in the market.
The contribution of top class talent to the ongoing development of Irelandâ€™s financial services industry is very much alive in the minds those who drive and lead it and they remain acutely aware of the need to cultivate leadership for the future. A significant number of institutions are beginning to implement and improve high touch and meaningful practices to find, develop, reward and critically retain their superstars. Many will be hoping that these will be solid enough to withstand the next battle in the war for talent when it arrives, as it surely must!