17
Integrated Talent Management
Dave Ulrich
Most can recite and readily recognize the changing landscape of business. Globalization makes the world both more uniform with global standards and more diverse with sensitivity to local customs and cultural differences. Technology makes the world more connected, smaller, and faster, as technology has moved from 1.0 with a focus on efficiency, to 2.0 with a focus on information, to 3.0 with a focus on relationships. Demographics have shaped workforce expectations as employees have learned to work across generational and global boundaries (see chapter 2 by Peter Cappelli on changing business conditions).
All these unending changes and challenges to business have moved talent to the forefront of business success (ASTD, 2009). Competitors quickly match price, product, and operations, but they have a more difficult time matching talent. Talent differentiates, drives productivity, determines customer service, and increases intangible shareholder value. Talent matters. Talent is too important to be left to uncoordinated events.
But as talent has become ubiquitous and important, it has also become more difficult to operationalize. Too often the term “talent” has taken on the black-box characteristics of concepts such as “quality,” “strategy,” and “vision,” as if it was a Rorschach test for business leaders where talent can mean whatever a business leader or writer wants it to mean. In this chapter, I try to synthesize and simplify the talent field into 12 principles. Each principle captures not only what has happened but also what should happen in developing talent. Each principle also has leadership implications for offering a more integrated approach to talent management.
Principle 1: Define the Talent Targets and Tailor Talent Initiatives
Principle 1 is to define the talent targets and to tailor talent initiatives. I was working in a company where the external board challenged the management team to invest more rigorously in “talent.” The pleas were both demanding and emotional, with claims that talent was the key to the future and that management should spend more time on talent. But when the executives worked to respond to these expectations, they were not sure where to start. It was helpful to them to begin by specifying five talent targets—shown in the first column of table 17-1—each of which required a different talent investment.
As explained in table 17-1, each of these talent targets has different challenges, key issues, and required initiatives. Thus CEO succession entails personalized assessments and plans to prepare backups for key leadership positions. The senior leadership cohort suggests improving the senior leadership group by building competency models and development experiences. Developing high-potential employees (generally about 10 to 15 percent of total population) starts with early identification of these future leaders, then cleverly increasing their development opportunities to prepare them for their future. For all employees, you need to ensure that the employee has the skills to do the work, the commitment to work hard, and an ability to find meaning from doing the work. And creating a talent-oriented organizational culture suggests that teams work together to meld individual talents into teamwork and that an organization develops a positive reputation for talent.
As each of these five areas is worked on individually and collectively, an overall definition of talent can be crafted: Talent is a systematic process (not an event) to secure general and targeted individual competencies (what people know, do, and value) and organization capabilities (not just a person, but also a culture) that create sustainable value for multiple stakeholders (employees, customers, and investors).
Leadership implication: Be very clear about whom you mean by talent. Who are the targets of your talent investments?
Principle 2: Talent Matters Inside a Company— and Outside
Principle 2 is that talent matters inside a company—and outside. Few would argue with the premise that organizations with better talent will be more successful, as defined by increased productivity (Dorgan and Dowdy, 2002), the ability to execute a strategy (Hrebiniak, 2005; Bossidy, Charan, and Buck, 2002), the extent to which there are backups in place for key positions (Rothwell, 2005), and employee engagement scores (Buckingham and Coffman, 1999).
In addition, talent may also be linked to external stakeholder outcomes. If a company has better talent, then we are likely to see increased customer, investor, and community value. A talent–customer value proposition exists where organizations with employees who have a more positive attitude will likely have customers who match that attitude (Schneider and Bowen, 1995; Ulrich et al., 1991; Schneider et al., 2009). Increasingly, there is a shared understanding that intangibles represent up to 50 percent of the market value of a publicly traded company. These intangibles represent the confidence that investors have in a firm’s ability to predictably deliver future earnings (Ulrich and Smallwood, 2003) and are rooted in how investors perceive the quality of the organization’s employees. Companies work hard within their communities to build a reputation, which both enables firms to attract better employees and helps employees feel better about their work (Dowling, 2002).
Leadership implication: Leaders should spend 20 to 25 percent of their time identifying, upgrading, and improving talent.
Table 17-1. Talent Targets
| Talent Target | Key Challenge | Key Issues | Example Initiatives |
| CEO and senior executives | Managing succession | • How do the senior leaders make surethat they have viable successors inplace? • How does a succession process workso that backups are prepared to move into key roles? |
• Backup plans • Succession planning process |
| Senior leaders | Building a leadershipcohort | • How do senior leaders (approximatelythe square root of the total number of employees) develop the competenciesto run the company in the future? • How do we place skilled leaders in keypositions? |
• Leadership competency models • Leadership academy andtraining • Matching person and position |
| High-potentiale mployees | Identifying and developing future leaders | • How can high-potential employees beidentified (ambition, agility, ability, and achievement)? • How can high-potential employeeshave individual development plans thatprepare them for the future? |
• Identification of those with highpotential • Personalized development plans |
| All employees | Upgrading talent processes throughout the organization | • How can all employees develop thecompetencies to do their current and future work? • How can employees increase theircommitment? • How can employeesfind more contribution or meaning from their work? |
• Integrated human resourcessolutions in recruiting, training, compensation, and performancemanagement • Improving commitment orengagement scores • Helping build meaning at work |
| Organizational culture | Investing in a talentculture | • How can leaders shape a culture thatencourages talent? • How can individual abilities be forgedinto organization capabilities? |
• Organization audits • Development of high-performingteams |
Source: Compiled by the author.
Principle 3: Talent Requires Individual Ability— and Teamwork
Principle 3 is that talent requires individual ability—and teamwork. Talent matters, but teamwork matters more. At the Academy Awards, about 15 percent of the time, the best picture of the year also has the best actor or actress. In professional basketball, soccer, and hockey, about 15 percent of the time, the team with the top scorer has won the overall championship. Like movies and sports, business today requires teamwork. In a world where knowledge (as measured by information on the Internet) doubles every four years, where the pace of change has increasingly increased, and where global complexity changes the rules of competition, no isolated individual has the ability to respond. To have sustainable organizations in a world of change and complexity, individual abilities must be combined into organization capabilities. Talent requires teamwork.
| Leadership implication: Leaders should not only attend to defining and developing skills of individuals but also to auditing and improving teamwork and organizational culture. |
Principle 4: Talent Should Align Competencies With Strategy Inside—and Stakeholders Outside
Principle 4 is that talent should align competencies with strategy inside—and stakeholders outside. Most talent work begins with competencies. Competencies represent the knowledge, skills, and abilities of employees (White, 1959; McClelland, 1973, 1976; Boyatzis, 1992). Historically, competencies have been identified by comparing low-and high-performing employees vis-à-vis critical incidents and determining a set of behaviors that distinguish the two (Flanagan, 1954; Andersson and Nilsson, 1964). More recently, competencies have been aligned with the strategy of a business (Lado and Wright, 1992; Burgoyne, 1992; Byham and Moyer, 1996). Competencies have more impact when they help a business deliver its goals.
Going forward, competencies inside a company may be aligned with the expectations of customers, suppliers, communities, and investors outside the company. The “right” competencies are those that align external expectations and internal actions (Ulrich and Smallwood, 2007). These customer-centric competencies then become standards for leaders and employees throughout the company. When competency models start with future customer expectations, they direct employee attention to what they should know and do. We often test competency models by showing the television commercials of a company. These externally focused statements define what the organization wants to be known for by external stakeholders. Then we match those expectations with the competencies identified in the competency model. In most of our work to date, the overlap between external expectations and internal competency models needs improvement.
| Leadership implication: Make sure that the leadership and other competency models tie to external customer expectations. |
Principle 5: Talent Requires Assessment, Both Inside and Outside
Principle 5 is that talent requires assessment, both inside and outside. Based on defined competencies, standards may be established whereby employees may be assessed on how well they perform. In recent years, most individual talent assessments have had some form of a balanced scorecard (Kaplan and Norton, 1996, 2001, 2006). For individuals, this logic has led to evaluating individuals on both results and behaviors (Slater, 1998; Welch and Welch, 2005). Talented employees deliver results that may be related to financial, customer, and organization outcomes. In addition, talented employees behave the right way based on how well they demonstrate the defined competencies. These competencies may be assessed by the employee, subordinates, peers, and supervisors through 360-degree feedback (Tornow and London, 1998; Lombardo and Eichinger, 2004). See the summary of assessment and appraisal by Ed Lawler in chapter 8.
However, to provide a holistic view, employees may also be evaluated by those outside the organization—suppliers, customers, investors, community leaders, and other external stakeholders. This shifts the 360-degree feedback to 720-degree feedback (360 x 2 = 720). And 720-degree feedback initiatives assess internal employee actions relative to external customer expectations.
| Leadership implication: Make sure that the performance management and assessment tools take into account external expectations and observations and focus on the future, not just the past. |
Principle 6: Talent Comes From Thoughtful Investment That Encourages Collaboration
Principle 6 is that talent comes from thoughtful investment that encourages collaboration. The billions of dollars spent on upgrading talent may be seen as investments in building future talent. I suggest six types of investments that upgrade global talent, with thoughts on how to look forward to more innovative talent management:
Buying7 —recruiting, sourcing, securing new talent into the organization (Smart and Street, 2008; see chapter 4 by John Sullivan). Increasingly involve customers or suppliers to source, interview, and orient new employees.
The assessment of and investment in talent needs to be done systematically to reflect the changing nature of the business. Top companies make sure that talent plans are as flexible as their strategic plans (see chapter 9 by Annmarie Neal and Robert Kovach, and chapter 11 by Rob Reindl).
| Leadership implication: Create aligned, integrated, and innovative approaches to upgrading talent that include job experience, development experiences, and life experiences. |
Principle 7: Talent Needs to Be Mindful of, and Gain the Benefits From, Individual Differences (Diversity)—and Build Unity
Principle 7 is that talent needs to be mindful of, and gain the benefits from, individual differences (diversity)—and build unity. Diversity awareness enables organizations to encourage variety in thinking and acting along a number of dimensions—race, age (generational shifts), gender, national culture, psychological orientation, career drivers, and global perspective. Managing diversity has social implications as societies assimilate people with different backgrounds, political ramifications as legislation attempts to serve multiple stakeholders, and economic consequences as organizations increase innovation and creativity by bringing together people with different backgrounds (Thomas, 2005). Internal diversity matters more as organizations operate in increasingly complex social and economic settings.
Although many organizations have implemented diversity or inclusion initiatives that foster respect for individual differences, I would also suggest that diversity without unity creates chaos. Simply respecting, responding to, or encouraging people who are different to come together will not result in better organizational performance if those people do not have a common goal and ability to work together. When they do so, societies, political systems, and organizations move forward. Organizations that maximize diversity without unity will devolve into disorder with respect for differences being an excuse for disconnected actions. Organizations that foster true diversity also have explicit unity. Unity needs to be centered on working for common goals that generally begin with customer orientation.
| Leadership implication: Make sure that there are clear, shared, and active principles that govern employee behaviors; they maximize diversity around everything else. |
Principle 8: Talent Should Focus on the A Players— but Also Pay Attention to B Players
Principle 8 is that talent should focus on the A players—but also pay attention to B players. Top performers produce a disproportionate amount of results (Smart, 2005). More recently, top performers have been labeled “A” players (versus B or C players), and leaders have been encouraged to match A players to A positions, which are those wealth-creating roles where top individuals can have maximum impact (Huselid, Beatty, and Becker, 2005). Top performers in key roles will generally produce stronger results. There is a myth that A players may be portable and that their skills may be sourced and shifted across organizational boundaries. Recently, scholars have been finding that it is even more important to retain top players than to attract them (Groysberg and Abrahams, 2010; Groysberg and Lee, 2009; Fernandez-Araoz, Groysberg, and Nohria, 2009).
However, B players are also important. “B” players are more likely to stay with the company (versus A players who are more mobile); there are more B players; B players are the heart and soul of a company and carry the institutional memory of the company (DeLong and Vijayaraghavan, 2003). When leaders find ways to engage B players without having to make them into A players, the organization builds a more comprehensive commitment throughout the organization.
| Leadership implication: Acknowledge the A players, but pay attention to the B players. |
Principle 9: Talent Requires Not Only Competence and Commitment but Also Contribution
Principle 9 is that talent requires not only competence and commitment but also contribution. A simple formula for talent has been competence x commitment (Ulrich, 1998). Competence means that individuals have the knowledge, skills, and values required for today’s and tomorrow’s jobs. One company clarified competence as right skills, right place, right job. Competence clearly matters, because incompetence leads to poor decision making. But without commitment, competence is discounted. Highly competent employees who are not committed are smart, but they don’t work very hard. Committed or engaged employees work hard, put in their time, and do what they are asked to do. In the last decade, commitment and competence have been the bailiwicks for talent.
However, the members of the next generation of employees may be competent (able to do the work) and committed (willing to do the work), but unless they are making a real contribution through the work (finding meaning and purpose in their work), then their interest in what they are doing will diminish and their productivity will wane. Contribution occurs when employees feel that their personal needs are being met through their participation in their organization. Organizations are the universal setting in today’s world where individuals find abundance in their lives through their work, and they want this investment of their time to be meaningful. Simply stated, competence deals with the head (being able), commitment with the hands and feet (being there), and contribution with the heart (simply being). An emerging talent formula might be: competence x commitment x contribution = talent (Ulrich and Ulrich, 2010).
| Leadership implication: Become a meaning maker as you couple the motions and actions of leadership with emotion and passion. |
Principle 10: Technology Facilitates Talent Management Processes—and Connection Among People
Principle 10 is that technology facilitates talent management processes— and connection among people. Technology has changed the way talent work is organized and delivered through information sharing, improved processes, redefinitions of work, and social networks. Technology enables individuals to source and share information from people who are not personally accessible. The Internet’s initial use was to be a more efficient and accessible encyclopedia where people could gain and share information.
Technology also improves talent processes (Kavanagh and Thite, 2008). Technology-enabled staffing includes employee databases such as Monster.com and web-based succession planning systems. Technology facilitates training and development by defining and assessing competencies and by using video and other web-based training programs. Reward systems are also technology-enhanced to more efficiently administer the process of setting goals, holding people accountable for goals, and allocating rewards. Technology handles the administrative requirements of talent management. Technology also redefines work boundaries.
Through technology, knowledge becomes an asset that does not need to be owned to be accessed. With technology, employees may work in a company without having a physical presence there. With technology, organizations can now accomplish work using individuals who have no formal or long-term relationship with the organization. Technology also creates social networks that enable people to connect with each other not just to share information but also to become part of a personal and professional community (Safko and Brake, 2009). As technology evolves from wireless networks to satellite transmissions to cloud computing to artificial neural networks, people become connected across time and space. These swarms of talented individuals focus attention, make decisions, and sustain social support.
| Leadership implication: Become comfortable with technology-enabled talent management. |
Principle 11: Talent Activities Need to Be Measured—as Do Talent Outcomes
Principle 11 is that talent activities need to be measured—as do talent outcomes. Talent measures traditionally track activities related to talent—how many were hired, how they were hired, where they were hired from, what percent of leaders received 40 hours of training, how participants felt about training, or what percent were promoted based on succession plans (Fitz-enz, 2001, 2009). These activity-based talent metrics help assess the processes related to talent, but they do not fully capture the outcomes of talent initiatives. Talent outcomes would be the response to the question “If we have better talent, what happens?” Some of these talent outcomes could be related to individuals (retention, productivity, preparation for promotion, or engagement). And some of them could be tracked in relation to organizational capabilities (speed of response, innovation, customer service) (Ulrich, 1990, 1997; Ulrich and Smallwood, 2004). The new return-on-investment of human resources (or talent) is return-on-intangibles—where investor confidence in future business success is measured by intangible shareholder value (Ulrich and Smallwood, 2006).
| Leadership implication: Create a rigorous talent assessment process that tracks not only activities but also outcomes. |
Principle 12: Talent Efforts Need to Be Owned by Line Managers—and Created by Human Resources and Learning and Development Professionals
Principle 12 is that talent efforts need to be owned by line managers—and created by human resources and learning and development professionals. Four groups of stakeholders might be involved with building talent (Ulrich et al., 2009):
Line managers are ultimately accountable for ensuring that the organization has the right talent and right organization in place to deliver on expectations to customers, shareholders, and communities. The term “line manager” refers to leaders at all levels of the organization. Members of the Board of Directors should be informed about the rationale for and outcomes of talent investments. Line managers in the C-suite (governing or executive committee) should be informed advisers for talent efforts. Line managers throughout the organization should also be aware of talent, how it will affect their ability to reach their goals, and what their role will be in helping it move forward.
Talent depends on the quality of HR (including learning and development) professionals and their relationships with line managers (Ulrich et al., 2008). If they cannot respond to the increased expectations raised by talent demands, they will quickly lose credibility and be relegated to second-tier status. Three targets are important among HR professionals: chief HR officer (CHRO), learning and development professionals, and HR professionals. The CHRO needs to be the talent sponsor by allocating money and time to the talent effort. The CHRO should initiate, take the lead in the design, and monitor the talent plan, ensuring that robust measurements are in place to credibly and accurately monitor progress. The learning and development professionals offer expertise and insights into all types of development activities (see chapter 16 by Rebecca Phillips, with Jane Binger). A talent transformation may be sponsored by the CHRO, but it must be enacted and lived by learning and development professionals throughout the organization. HR and learning and development professionals who embrace talent initiatives recognize that their personal success is linked to the success of the HR transformation. HR professionals become architects who build frameworks and offer ideas to line managers.
Consultants or advisers bring insights and ideas into the talent arena. A colleague who has deep expertise in merger and acquisition integration recently shared that he had been retained to help a client manage a merger integration. But the client, in an effort to cut costs, opted to not use these services and worked to integrate the merger without outside counsel. Six months later, they had not realized the synergies they promised the investment community when they made the merger, key employees had left, the combined company strategy was haphazard, and leaders were questioning if they had made the right choice in the merger. No one can guarantee that our colleague could have averted these problems, but he had experience in dozens of companies that had faced and overcome these and other problems. Judicious and targeted use of outside consultants as partners may advance talent investments. Consultants may add value by bringing in experiences from other companies, by previewing and averting common challenges, by not being beholden to a political system that might limit creative problem solving, and by being independent contributors to the talent management process.
The customer and investor perspectives are critical to informed talent decisions. When there is a line of sight from external expectations to internal talent actions, those actions will more likely be sustained.
| Leadership implication: Make sure that your approach to talent includes an integrated solution with experts from line departments, HR, and learning and development. |
Summing Up
To make assessing your own talent management efforts easier, these 12 principles and the auditing questions that go with them are summarized in table 17-2.
Talent matters. No one disputes this in both good and bad economic conditions. But when we can turn the complex and almost unmanageable array of talent ideas into basic principles, leaders can begin to improve their talent efforts.
Table 17-2. Integrated Talent Assessment
| Talent Principles | Diagnostic Questions |
| 1. Define talent targets | • How well do we delineate the different talent targets? • How well do we tailor our talent investments to the specific needs of each target group? |
| 2. Talent matters inside a company—and outside | • How well do we link talent to the stakeholders both inside and outside the company (employees, organization, customer, investor/ owners, community)? • How much time do our senior leaders spend on improving talent? |
| 3. Talent requires individual ability—and teamwork | • How well do we manage teamwork within our organization? • How well do we focus on key organization capabilities that define our culture? |
| 4. Talent should align competencies with strategy inside—and stakeholders outside | • How well do we link competencies to business success? • How often do we link internal competencies to external expectations from customers, investors, and communities? • How well do our internal competencies match external expectations? |
| 5. Talent requires assessment both inside—and outside | • How well do our assessments connect employee behaviors with external expectations? • How well do we use multiple assessment methods (psychological tests, assessment centers, etc.)? • How well do we tie assessments to rewards and other consequences? |
| 6. Talent comes from thoughtful investment that encourages collaboration | • How well do we bring new people into the organization? • How well do we develop talent with job assignments? • How innovative are our training experiences? • How well do we invest in talent through promotion systems? • How well do we integrate all the talent investment activities into a cohesive approach to talent? |
| 7. Talent needs to be mindful of individual differences—and unity | • How well do we pay attention to diversity of age, gender, race, global background, education background, ethnicity, and work style? • How well do we emphasize the areas in which we must have unity in order to succeed? |
| 8. Talent matches players to positions | • How well do we differentiate players (A, B, C)? • How well do we differentiate key positions? • How well do we match players to positions? • How well do we attend to the B players? |
| 9. Talent requires competence and commitment—and contribution | • How well do we work to define and increase employee engagement? • How well do we gauge and increase employees’ sense of contribution? • How well do we help employees find meaning at work? |
| 10. Technology facilitates talent management—and connects people | • How well have we used technology to make our talent management processes more efficient? • How well do we use technology to connect people to each other? |
| 11. Talent activities need to be measured—and outcomes | • How well do we measure the activities related to talent? • How well do we measure the outcomes of talent activities? |
| 12. Talent is owned by line managers . . . and architected with human resources and learning and development professionals |
• How well do we hold line managers accountable for talent management efforts? • How well do we build a partnership among line managers, human resources professionals, and learning and development professionals to upgrade talent? |
Source: Compiled by the author.
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About the Author
Dave Ulrich is as a professor of business at the University of Michigan and a partner in the RBL Group, a consulting firm focused on helping organizations and leaders deliver value. He studies how organizations build capabilities of speed, learning, collaboration, accountability, talent, and leadership by leveraging human resources. He has helped generate award-winning databases that assess alignment between strategies, human resource practices, and human resources competencies. He has published more than 100 articles and book chapters and 22 books. He has won numerous lifetime achievement awards and has consulted with more than half of the Fortune 200 companies.