Business strategies are being reviewed on much shorter cycles than ever before. Inextricably linked with these strategic reviews is an organisation’s talent plan, one that must be frequently re-crafted to ensure the right talent is in place to tackle fast-changing and often unpredictable business demands.
Many boards and leadership teams are slow in recognising this fundamental dynamic.
Keeping it fresh
When a talent plan is in place, it is traditionally refreshed every three to five years. That is no longer viable in a world where the speed of disruption, digitisation and rapid marketplace changes shows no sign of slowing.
Having the best talent is the lifeblood of any organisation – ever more so in this rapidly changing world. And that means tackling everything from recognising and rewarding potential, to leadership assessment and development, and ensuring your executive team is adept at effectively implementing talent strategies.
The buck stops with the board
Broadening this out for a moment, the mandate of the board - in addition to including CEO and leadership appointment and succession - should also include ensuring that a current TP is in place. Elevating the talent plan to the highest level of strategic oversight ensures that the organisation can effectively respond to rapid change.
Enlightened boards understand the importance of making changes to the talent plan when circumstances demand it. The hardest part, perhaps, is often that the board needs to also 'look in the mirror' to ensure that as the business evolves, it, too, has the right talent and competencies in place to govern effectively.
Of course, boards also need to ensure that the right leadership team is in place so that the company strategy is understood by all; that employees, in turn, understand their role in it and that employee aspirations and potential are acted upon. Retaining great people is absolutely essential.A good talent plan also includes risk mitigation and succession planning. What would happen if an unexpected and unplanned emergency were to require rapid replacement of a key executive or board member?
Five key talent plan elements
What does a good strategic talent plan look like? There are five key elements at play.
An effective talent plan must be:
- driven by the company’s business strategy or changes to the strategy.
- informed by a clear understanding of the current and future business model and organisational structure.
- cognizant of the key roles that are strategically important within the business.
- honest about where your talent needs to be upgraded.
- aimed at maximising, on a continuous basis, the deployment of your best talent to the most impactful roles.
Do you have proactive executives in place who are adept at making radical changes to the talent plan when strategic business needs demand it?
To achieve these five elements, the right people at the highest level have to be involved. It may be necessary to appoint someone from within the business, or even an outside consultant, to provide strategic leadership in this area and effectively deal with rapid change.
The board’s talent test
As EY notes in its recent report, Boards Turn to the Talent Agenda, “Many forward-thinking boards are adopting a broader view of understanding a company’s talent strategy and mitigating human capital risk. While these boards and, in particular, compensation committees remain focused on developing senior leaders and building a diverse talent pipeline to fill key executive roles, many are also expanding their oversight to key talent indicators for the overall workforce.”
The majority of boards spend most of their time on governance and business matters but only occasionally focus on the strategic talent agenda.
Traditionally, boards have focused on hiring and firing the CEO, executive compensation, reviewing and approving the leadership team, and so on. But in recent years, the connection between the business strategy and the talent plan has become more apparent. In addition, the active management of a talent plan has become more important as the board partners with the CEO to drive greater agility and performance.
This emerging practice is driving optimum results for more forward-thinking boards.
This article is from the latest ‘Talent and Potential’ edition of the Odgers Berndtson magazine, OBSERVE.
The 17th edition of Odgers Berndtson’s global magazine is coming soon.
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