Talent Management Seen as Top Priority, but Draws Scant Leadership Effort

While many organizations' senior leaders say that their companies' performance will soon suffer because they don't have the right talent in place, few of these executives have taken the hands-on approach needed to do anything about it, according to a report released by global consulting firm Development Dimensions International (DDI).

The findings of the report Growing Global Executive Talent: High Priority, Limited Progress are based on a survey of 412 senior leaders in Europe, North America, Asia and Australia conducted in the fall of 2007 by the Economist Intelligence Unit (EIU) for DDI. They revealed, among other things, that while talent management was a significant priority for organizations, efforts to address it weren't meeting the needs of the business.

"Leaders see the opportunity, they talk about it, they invest in it, but this is a job that requires their direct involvement, and most just aren't skilled or experienced at doing it themselves," said Matt Paese, vice president of executive solutions for DDI, in a statement about the report. "It's astounding given the fact that they recognize the business impact of having the right people—yet they're outsourcing accountability for it."

Talent Management from the Top Down

The study found that 85 percent of CEOs said that talent management is as important as or more important than other business priorities. But only two in 10 leaders say they often spend time managing talent, and only one in 10 often reviews it with their board of directors.

"Many leaders don't recognize that their involvement in talent management initiatives could turn the tide for the organization," Paese said. "It's a missed opportunity for those leadership teams."

One-on-one interviews with eight C-suite executives revealed that there are some senior executives who "get it," however, and work to set the tone for the entire organization through their own involvement.

For example, Yum! Brands Chairman and CEO David Novak said he sees talent management as his responsibility. He said he continuously focuses on talent management "because every opportunity is a chance to coach, develop [and] share what you've learned with somebody else, get a perspective on somebody, assess their potential, assess their development needs."

"Any time I go into a meeting, I'm always looking at the people and thinking about what I can do to develop them, improve their skills, give them the coaching they need," Novak said.

Right Place, Wrong People

The executives surveyed said their greatest obstacle to executing business strategies well was not having the right person in the right job. For some organizations, this means not making the right promotion decisions, and for others, it's not having enough talent ready to move into critical roles.

"This suggests that while organizations fully recognize the criticality of talent management, they are often not prepared to replace leaders who are not executing effectively," Paese said.

Insurance company Aviva Asia Pacific's CEO Simon Machell said that some executives don't commit fully to talent management because they don't like the idea that their subordinates might outshine them or even leapfrog them to promotions. "One of the biggest obstacles to talent management is attitude," he said.

So Machell said he plans to tie promotions and other rewards to his team's ability to lead and develop talent. "If the culture sees that you get rewards and progress onwards by developing good people, then that very quickly becomes a way that things get done here," he said.

Development Disillusionment

Half of the leaders surveyed said their organizations are doing sub-par work in developing their leaders and more than half said they were fair or poor at identifying talent. Further, 60 percent of organizations are not satisfied that talent is growing fast enough to meet their most critical business needs.

"This is dramatic, because this tells us that leaders are grading themselves poorly on the two most fundamental elements to growing talent—identifying and developing leaders," Paese said.

Some companies, such as U.K.-based GE Healthcare, spend a significant amount of time assessing and training their staff to ensure they have ready replacements for leadership positions when they open.

"When you leave a major leadership position open in a vacuum, it's incredible how performance can suffer," said GE Healthcare's CEO Joe Hogan.

Parent company General Electric typically nudges promising executives toward foreign assignments or those that will help build international experience. The company also is known for its close monitoring of managers' progress to ensure that executives are ready for the next step.

"You have to understand how customers are different, how employees are different, how expectations are different in different geographies, and not just project an American or Western mentality on a truly global market and global talent," Hogan said, noting he also looks for people who can motivate employees, stay cool under pressure and who possess personal integrity.

The root of the problem doesn't seem to be the availability of tools, programs, processes or initiatives, notes the report. Nor does it appear to be that businesses don't understand what skills and capabilities leaders need now and in the future or how to grow leaders. Where they do struggle "is in the enterprise-level alignment and execution of these initiatives and in the sustained pursuit of organization-level outcomes that result in true talent enhancements." And this disconnect appears closely associated with strategy, ownership and measurement.

Companies need to "increase their efforts to establish clear and simple strategies for how talent will be grown in their organizations, and establish equally clear and simple metrics by which progress against this goal will be tracked," the report concludes.

In addition, "the specific accountabilities of leaders at all levels, starting with the CEO and his or her team, must be articulated and linked to incentives and consequences for all employees."