The competition to recruit the top performers in an occupation or industry is most likely to be won by firms that excel in employer “branding”, where they position themselves as an employer “of choice” or a “must have” name on an individual’s job résumé. Firms will pay a lot for IT specialists and a prolific amount of money is spent on buying in talent in the financial sector. But acquiring talent can be the only option for firms that are growing rapidly or where there is intense competition for certain skills so as to capitalise on a new business opportunity, such as business analytics or social-media-based marketing.
Borrowing talent
When there is a temporary need for specialist skills it makes sense to borrow or “rent” what is required by contracting with, for example, freelancers, independent consultants, staff on secondment or firms that will supply staff.
This form of flexible labour has always been important to firms, but in uncertain times such flexibility becomes more attractive. It enables firms to assemble new combinations of skills in swift response to sudden shifts in their environment. It provides firms with access to a wider pool of talent, especially in the case of work that can be performed in any location. And although freelance specialists may charge top-dollar rates, it can make good economic sense – providing temporary workers do not in effect become expensively permanent.
Temporary workers, who are able to carry out their work remotely, can be hired through traditional recruitment processes or through online marketplaces, known as “talent exchanges”. Employers specify what they want done remotely or “virtually”, and interested individuals then bid for the assignment. These talent exchanges, sometimes described as “cloud talent sourcing”, enable firms to access a global pool of talent.
According to The Economist, online marketplaces like ODesk and Elance have grown rapidly. The value of work contracted online exceeded $1 billion in 2012 and is forecast to double to $2 billion by 2014 and to reach $5 billion by 2018. ODesk brokered 35m hours of work in 2012 (over 50% more than in 2011), divided among 1.5m tasks, at a total cost of $360m to its corporate customers. The value of work on Elance rose by 40% in 2012 to more than $200m. Some 69% of Elance’s freelancers have a university degree or equivalent professional qualification and their work assignments often last several months.
According to the Human Capital Institute, the type of work done by temporary workers is changing. The increase of specialised work and the heavy reliance on project work in knowledge-based organisations mean that it now involves those with expertise in such fields as engineering, IT, health care, accounting and finance. In a 2010 survey conducted by Accenture and the International Association of Outsourcing Professionals, just over 40% of respondents indicated that outsourcing at their organisations was increasingly focused on knowledge-based activities.
The role of HR is to act as a “talent broker”, helping achieve a tight fit between a skilled individual employed on a temporary basis and specific tasks and projects across a business. The more a business relies on such temporary talent, the more it needs to consider how to manage such people and whether they should be included in talent management processes, such as learning and development initiatives. This topic is explored in greater depth in Chapter 6.
Building talent
A larger firm will seek to build its own talent by creating a reliable “pipeline” of high-potential and high-performing employees. The aim is to spot rising stars early and to invest in their careers in the expectation that they will progress to senior positions in the business.
Typically, these individuals are placed in a talent pool where their progress is monitored and where they are given extra opportunities for training and development. To keep talented people moving through the pipeline there is an emphasis on performance management, so any weaknesses or developmental needs can be spotted early on. If they live up to expectations, these high-flyers are slotted into succession plans as they rise up the organisation and gain greater experience.
The notion of keeping talent moving around the business is critical. HR and line managers often work together to make sure that promising employees gain experience in different functions and business units. This requires career mapping, where the organisation (probably HR) devises a “road-map” for employees outlining the skills, experiences and qualifications they need to move from one job to another, and longer-term development plans, which might include a combination of coaching, on-the-job learning, management development programmes and further study towards professional qualifications.
This approach is most commonly taken by larger businesses, especially multinationals like Unilever, Mars and Olam International (see below) because they have the resources to provide promising employees with targeted training and development and a wide range of work experiences, especially international assignments.
The biggest challenge is to make sure that every part of an organisation is clear about what it means by talent so that high-flyers are identified, nurtured and developed equally well across the organisation. HR processes need to reflect these definitions (so using a company-wide competency framework helps ensure consistency in decisions about performance, promotion and development, and so on). Fragmented processes can also lead to some individuals getting lost in the system or being held back by a boss who may not want to lose them or who feels sufficiently threatened by them to block their progress.
Performance data on talented staff must be collated so that there is strong evidence for decisions affecting them. And other data should be gathered from across the organisation to demonstrate the link between investing in promising staff and their impact on the business. However, as Chapter 3 argues, this intensive process-based approach can lead to an unwieldy talent “machine” which causes HR staff to spend too much time in transactional activities instead of taking a more strategic role.
The options of buying, borrowing or building talent are not mutually exclusive. Indeed, over time the majority of organisations will do all three to meet different needs in different circumstances.
Olam International
Olam International is a global integrated supply chain manager and processor of agricultural products and food ingredients. Its talent management strategy is set against the background of the decision taken in 2009 to expand its activities. As well as trading commodities like cotton, palm, rubber, coffee, rice and edible nuts, Olam decided to farm, source, manufacture, package, market and distribute these commodities – what the firm calls going upstream and downstream in the supply chain.
The company embarked on a spending spree (which came to an end in spring 2013 after savage criticism by a prominent American hedge fund, which engaged in some large-scale short-selling of the company’s stock), acquiring 30 agricultural assets such as almond orchards, dairy farms, rubber plantations and processing plants and in the process boosting its workforce by 30%.
The pace and extent of the growth presented a number of HR priorities.
Embed a common culture
The first was embedding a common culture into a disparate set of newly acquired processing facilities and plantations so that all technical specialists and managers signed up to and were motivated by the company’s shared values of entrepreneurship, ownership, integrity, mutual respect, stretch and ambition. Janaky Grant, head of learning and development at Olam, explains:
We have a group of business leaders who form the Culture and Values Standing Committee. When Olam re-looked at its business strategy in 2008–09, the committee played a key role in questioning our existing core values and whether they were going to hold up in a larger and more diversified business.
The result was that we redefined our core values so that they could be applied across the organisation including the newly acquired entities. We organised forums to communicate the shared values.
We also held sessions where people discussed the dilemmas of behaving according to these values in practice. Our people are often spread out working in rem
ote plantations, farms and manufacturing plants so it was useful to debate various dilemmas and achieve a shared understanding of the desired values..
Identify and develop new skills
The second was identifying and developing the new skills the company was going to need. Joydeep Bose, president and global head of human resources at Olam, stresses:
In the past, the role of a manager was managing an enterprise. Leaders were managing large teams, distribution networks and logistics. Now, the organisation has invested in manufacturing assets, investment projects and plantations. The new group of managers who run these businesses require deep expertise in these different parts of the supply chain.
The company focused on drawing up what it terms “domain-specific competencies” – the skills that apply to each part of the business such as sourcing products (requiring, for example, skill in procurement); trading (trading insights, hedging derivatives); packaging and distribution; and marketing products. To help build these capabilities, the company established “communities of practice” to connect plant managers, production and quality managers across businesses based in various African and Asian countries. These committees meet regularly to build a shared knowledge base. “They talk about challenges and share their success stories,” says Grant.
Identify and build global leaders internally
The third was to set in place an accelerated process of identifying and building global leaders internally who could manage capital-intensive businesses and assets and pursue new business opportunities that were emerging as Olam pursued its growth strategy.
Each year on average 30% of the total people hired are recruited through a graduate trainee programme. This is globally co-ordinated across universities and business schools in Asia, Africa, Australia and North and South America. Graduate trainees are typically placed in commercial and operational roles, but they go through 18 months of training before starting to ensure they have a rounded understanding of the company’s businesses, operating processes, culture and values and the various roles across the global organisation.
The graduate trainee programme is linked to a global assignment talent pool (GATP), which consists of 750 managers in critical positions across the 65 countries in which Olam operates. Bose explains:
People are selected to the pool based on roles in the organisation that we consider as having a higher impact – and people who demonstrate a strategic fit in the organisation and its desired values and behaviours. These roles have a global dimension. These individuals need to acquire a wider perspective beyond the boundaries of their countries.
These people will be moved across Olam’s many products, geographies and functional boundaries. However, we want our general managers to acquire more specialised knowledge, so we expect them to be in each position for at least four to five years before they take on another role.
Olam has also headhunted more experienced staff to fill newly created specialist global functions that provide across-the-board support for the various businesses.
Succession to specific roles is reviewed regularly by a committee comprising business heads and HR managers. Any talent management expenditure is discussed by the committee and assessed on the basis of whether it is aligned to the business’s needs. Olam’s goal is that HR practices are led and managed by the business heads themselves.
For example, Steve Driver, head of manufacturing and technical services, a global function that was created from scratch in 2011, sets standards and procedures to ensure consistency across manufacturing. He also works with HR to provide training and development for high-level skills that help manufacturing teams implement growth plans (such as buying a new manufacturing plant), achieve efficiencies and build capability in manufacturing processes.
Driver is responsible for talent processes for the country managers, heads of business units and plant managers who oversee or run manufacturing facilities. He and his leadership team work with the central HR team as a “strategic partner”, as he explains:
We work extremely well together. We meet three times a year to ensure we have the required skills and capabilities within manufacturing. We agree our direction, based on a balanced scorecard analysis of the function. A lot of our work has been around defining model profiles for various roles. We spend a lot of time running workshops in different regions explaining this approach.
Driver believes it is his (not HR’s) responsibility to get buy-in from business heads to sign up to the new capabilities required by the new strategy. He asserts:
Putting in place these processes, structures and disciplines is one thing. The second thing is getting management support. This is how I spend the bulk of my time – explaining to the regional heads why we are doing things differently and getting their buy-in.
These are aggressive alpha-male MBAs who have been driving the business very successfully. It was a question of sitting down with them and telling them – and telling them again – that the last thing anyone wants to do is to stifle growth or entrepreneurialism, but there are certain things that have to be done differently. I emphasise that this is value-creating. These are smart guys. It might not be their natural inclination – but they get it.
With the new standards and competencies in place, the manufacturing and technical services leadership team has recently conducted a talent review for top managers across the globe, based on performance data from the annual appraisal process. This review looks at their strengths and weaknesses as well as judgments about their potential, with the aim of designing longer-term career paths.
Driver emphasises the importance of a “can do” approach to talent management when an organisation is expanding as rapidly as Olam:
In such a dynamic business, it is hard to stay ahead of the curve. You have to be nimble. A gap appears and you plug it.
We don’t have lots of meetings about talent management. We sit down with the HR team, we set out our business priorities and our talent agenda. We don’t make a big deal of it and we don’t analyse it to death, we just get on with it.
Gaining sponsorship from the business
Talent management must be integrated into such activities and processes as budgeting, strategic planning and risk management.
Responsibility for overseeing talent management and making sure that there is an adequate return on investment should ultimately lie with the top management team. Those in charge of the talent management function should report to a committee made up of senior managers from across the whole business, which should meet regularly to make sure that the talent plan stays closely linked to the strategic plan and direction, agree any changes to the talent plan, make decisions about high-level risks and issues and sign off investment decisions.
The role of the CEO
An important factor underpinning Olam’s talent management strategy is the close involvement of the company’s chief executive, Sunny George Verghese. He chairs the committee overseeing key appointments and meets newly recruited members of the company’s talent pool every quarter. Bose explains:
Our chief executive stresses that the key expectation he has of his leadership team is to deepen and propagate the culture that underpins our growth. Any manager who comes into the GATP attends a session that the CEO conducts over four days. The sessions are intense. They start at 8am and end at 7pm. The CEO takes them through the rationale of why we are in business, what are we for, what the future is like, what is the strategy and what are the values and how do we live them.
His example, according to Eric Olsen of Heidrick & Struggles, should be followed by everyone:
We find that often the chief executive intervenes for a short period saying this talent function isn’t working, we need to get smarter, we need to get it more aligned around strategy. I’ll give it to one of the senior HR people by calling him or her head of talent – and then I’ll go off and do the things I do.
This HR-led, process-based approach fails because the chief executive is the missing link.
He or she needs to get much more active in the ownership of the outcomes. You wouldn’t see the chief executive abdicate his or her responsibility for finance or marketing – yet it often looks like they simply lob the ball to the head of talent and then walk away from the consequences. They need to stay involved.
The foremost champion of this view is Indra Nooyi, chairman and chief executive of PepsiCo. As she explained in a 2011 presentation to chief executives in Boston:
How much time should we as chief executives spend moving talent management from the art that it has been to real science? I’m going to challenge all of you and say that if you are not spending at least 40% of your time on talent management you might well run into an issue about going forward … It is hard to find the time but tell yourself that this is critical to the company’s future.
At PepsiCo, we are an engine for talent development. We embrace it and it also means that we have to constantly reinvent what we are doing … So it would not come as a surprise to you that the first thing I did when I became chief executive in 2006 was to get started on my senior executive succession planning, not just the succession planning for the chief executive but for the entire senior management team.
The first thing we did as the leadership team was to sit down and ask ourselves this most important question – “Where do we want to take PepsiCo over the next 10–15 years?” From this came PepsiCo 20–25, a blueprint that sets out alternative scenarios for the company to drive sustainable growth and top-tier financial performance.
That blueprint in turn informed the skills that we need in order to move the company forward. Then what we did was to go a step further. For both ambitious goals, we identified 300 critical senior leadership goals that we thought would make or break our success. We then asked, “What are our pipeline needs?” We built in demand ratios and said that we needed to have one emergency successor for each job, and then two people in the one to three year timeframe and another three people in the four to six year timeframe.
Managing Talent Page 5
