How to Align Culture and Talent: Get a Talent Philosophy

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At Consolidated Snacks, the product management team meets quarterly to review market share and revenue data for its 18 salty snack products. The team uses this data to allocate their limited marketing budget. They have also created a handful of guidelines to ensure that their investment decisions consistently reflect the company’s product management philosophy.

Among the team’s guidelines are that product showing strong sales growth will receive three times the marketing investment of products with average growth. They’ve also agreed that products that are not growing and in the bottom quarter of sales will be culled to make room for new products.

At this quarter’s review, Marketing VP Susan Smith shook her head with disappointment when the conversation turned to Caribbean Corn Crunchers. She was the product manager who had originally launched the spicy corn chip and had invested significant personal capital in its success. Yet after a strong start Crunchers hadn’t captured meaningful market share and was performing below its competitors. Susan was emotionally committed to the product but made the tough decision to sharply reduce the snack’s marketing investment consistent with the team’s guidelines.

A senior team unemotionally managing their product portfolio using a consistent set of guidelines may seem unremarkable to you. After all, it would be chaos if every product manager at Consolidated Snacks made investment decisions according to their personal preferences. Products with similar sales potential might get wildly different marketing and promotion investments. Products needing to be culled might remain in the product line, diverting resources from more promising new entrants. Disciplined decision-making would seem essential to properly manage any aspect of their business.

So, what if we substituted the word “talent” for “product” in the scenario above?  Could you say that your company has:

Clear guidelines for how long it’s OK to be an average (50th percentile) performer?

Agreement among the executive team about how much to differentiate the investment in high performing employees compared to average performers?

A consistent approach for how transparent you are with leaders about their potential to advance in your company?

If you answered “no” to those questions you’re not alone. Only 30% of the 121 companies we surveyed had firm-wide guidelines for how talent should be managed. Even in the few firms with guidelines, many were more platitudes (“we value all employees”) than operational parameters for managing talent. If clear, consistently applied guidelines support quality decision making in other parts of the business, surely they can add value to talent management decisions as well.

Why you need a Talent Management Philosophy

A talent philosophy is the executive team’s belief about the most effective way to manage talent to achieve the business strategy. By definition, it says that the more people are managed in this way, the more successful the company will be.

But few companies have a philosophy and that results in confusion about how to best manage employees. Depending on the manager, a high potential employee might be aggressively developed and rewarded or receive just a token recognition of their ability. A high performing employee with less than perfect behaviors might be quickly promoted by one manager or held back by another until those behaviors improve. This variance undercuts your efforts to manage talent for maximum impact. Without an explicit talent philosophy employees must infer their company’s “rules of the road” by observing how talent-related decisions are made. It’s not likely their assessment will give your company the benefit of the doubt.

Creating a Talent Management Philosophy

Our research finds that a company’s approach to managing talent is defined by five elements:

Performance: What are the consequences of higher or lower employee Performance?

Behaviors: How much do behaviors matter and at what threshold do we start to care?

Differentiation: How should we allocate our company’s resources and rewards across varying levels of performance and potential?

Transparency: How open should we with employees about their performance and their potential to advance?

Accountability: To what extent should managers be accountable for building the quality and depth of their teams?

Developing and implementing a talent management philosophy is a straight forward process:

First, get senior team input and consensus: Our data shows that executives often unknowingly disagree on key elements of a talent management philosophy. Use a short survey instrument to map your executives’ views on each element and to highlight key areas of disagreement. You can start with the questions listed above.

In an executive team meeting, present the findings and get agreement on the desired direction in each talent philosophy area.

Second, conduct a reality check:  It’s easy to give socially desirable responses when asked talent philosophy questions.  Should we hold leaders to higher performance standards? Absolutely! Tell high potentials about their status? Of course! But those easy answers may create more difficult decisions.

That “Steady Eddie” Finance Director with the great attitude and two kids in college? He’s been here 15 years, never received more than the middle performance rating and has little possibility of promotion. Your proposed rules say that he’s out in a year unless his performance improves or he shows potential to advance. Is everyone OK with that? Use insights from this reality check to fine-tune your final talent philosophy.

Third, build HR processes and communicate to employees: Once you’ve agreed on the rules, modify your HR processes to enable them. Talent review, succession, development and compensation processes all likely require adjustments to consistently support your new philosophy.

Finally, and most important, transparently, repeatedly and thoroughly communicate the new talent philosophy to your managers and employees. Managers need to understand your company’s expectations for how they should manage talent and the consequences of doing that well or poorly. Employees need to know what the rules are for succeeding in your organization.

Creating your company’s TM philosophy may be easier than you think. Executives enjoy this discussion and are far more likely to support their own views on talent philosophy, than views pushed on them by HR.

Author- Marc Effron, President, The Talent Strategy Group. He consults globally to the world’s largest and most successful corporations. He co-founded the Talent Management Institute and created and publishes Talent Quarterly magazine. He co-authored the Harvard Business Review Publishing best-seller One Page Talent Management and 8 Steps to High Performance. His prior corporate experience includes senior talent management roles at Bank of America and Avon Products. His prior consulting experience includes starting and leading the Global Leadership Consulting practice at Hewitt Associates. www.talentstrategygroup.com

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