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have little or no power over hiring or promotion. They are balancing the strategic, external talent challenges facing the company with tactical and internal challenges, often with only influence to help them. The global economic crisis and the huge increase in unemployment have not made their role any easier. Counter-intuitively, there is still a marked shortage of people with the skills required to lead global companies. The concerns of baby boomer and generation X executives are important, but the future of most companies rests with the next generation. In the context of these challenges, there is a need to share best practice to create the conditions for success. Based on what we have observed and the insights that we have been able to glean, we have developed a framework called the 7Ps which will be helpful in structuring the role of a Head of Talent: Pressures, Purpose, Person, Profile, Power, Process and Pools. Overall, our research revealed an embryonic but emerging business discipline with little consistency around objectives or methodology. We discovered a complex set of factors, many of them contradictory, affecting performance and success. Even with the high stakes attached to successful talent management and the right framework to help them succeed, winning Heads of Talent will still have to be diplomats rather than commanders, achieving results through relationships and persuasion. Encouragingly, we found many Heads of Talent who had adopted this approach. Heidrick & Struggles role as a leadership advisor to global organisations gives us a privileged perspective on these emerging trends and we undertook this study to start an on-going conversation with CEOs, senior leaders and Heads of Talent on how to maximise the business impact of leadership talent.
average length of time Head of Talent role has existed in the company
average length of time current Head of Talent has been in the role
number of different job titles identified in our survey for the role
6 out of 10
average score in answer to: How well do you think your organisation manages talent?
Heidrick & Struggles 3
Introduction
There is a growing body of evidence to support the idea that companies that align business and leadership talent imperatives have a greater chance of sustainable success. It feels intuitively correct; if you have the right leadership talent in the right place with the right skills and behaviours, then the odds of successfully executing on your business strategy are high. Many of our CEO clients agree and have moved leadership talent to the top of their agenda, assigning responsibility to a senior executive.
At Heidrick & Struggles, our belief is that these Heads of Talent have an important role to play in improving corporate leadership, and that an effective Head of Talent could have substantial impact on a firms competitiveness. We wanted to test this theory by learning more about these senior talent executives: who they are, what they do, the agenda they address, the context within which they operate and what constitutes success in their role. Top talent executives from 24 FTSE100 companies helped us in our research. The firms we surveyed use a wide range of titles for these leaders, but in this report we will refer to them as Head of Talent.1
Together with these executives, we identified a series of practices, tools and competencies that can help create the conditions for success within this role and for the company as a whole. In addition to the survey findings we have brought additional insights from Heidrick & Struggles leadership consulting experience, as well as from research conducted at Harvard Business School. The report is divided into three parts: A summary of our findings; a review of the context within which these talent executives operate and finally a few tips for attaining success. We hope that it will be useful both to CEOs when they consider how to execute on their talent agenda and to the senior talent executives who are responsible for making the alignment of business and talent strategy a reality.
A wide variety of Hot Topics that keep Heads of Talent awake at night
Interviewees split their Hot Topics into two categories strategic and external talent challenges facing the company and tactical and internal issues. There are few surprises on either list, but several of the mega themes resonated with our experience and wider research on leadership talent. Generally, we see that Heads of Talent are battling to create alignment between business and talent strategy:
Hot topics
Strategic
Diversity Demographics Aging population Generational mix Globalisation & Emerging Markets Global and Glocal talent model Relocation of business from West to East Identifying, attracting & retaining talent in emerging markets Mobility Willingness to move Skills gaps across geographies Critical skills gaps Global shortage of General Managers Lack of commercial savvy From product to customer-centric competencies Succession Internal/External pipeline Retention
Operational
Workforce planning Business ambivalence Dont get the talent management thing Resist forced distribution and performance management Career transitions Sizing roles to smooth career moves Internal rotations and transfers Quality of talent professionals Development plans and internal coaching Talent metrics, data and tracking Change fatigue
2 European Corporate Governance Report 2011 Challenging board performance, Heidrick & Struggles, 2011
succession of its senior leaders is inadequate. The statistics are quite worrying too only 58% of boards we surveyed in EMEA had an effective CEO succession planning process and 46% had a vetted and viable candidate who could immediately step in as CEO if necessary. In the face of the critical skills shortage we explore later, many companies want to mitigate their leadership risk by aligning their talent agenda and pipeline practices to create succession ready pools, both inside and outside the company. Interestingly, we noted that few Heads of Talent had responsibility for creating and managing external talent pools.
A common theme for the Head of Talent is the creation of consistency across decentralised units
Many of our interviewees conveyed a history roughly like the following: As a result of decentralisation and corporate downsizing, line managers became responsible for hiring, developing and retaining talent in their units. This had the advantage of making the line managers accountable, but it often led to inconsistencies. Many respondents told us that their CEOs now wanted an integrated and consistent approach, more often driven by a desire for effective rather than simply more efficient senior talent processes. The CEOs could see that some divisional leaders did a great job in building their teams to the point that they could act as net talent exporters to other parts of their organisations; others experienced high turnover and had to look outside their units for succession. Achieving more consistency across units thus became part of the mission for many of the Heads of Talent we interviewed. At the same time, our interviewees did not expect the return of big central HR. The Heads of Talent we interviewed typically ran very small teams. Most had power that was indirect. There were few big budgets in fact the majority of Heads of Talent didnt know the proportion of the overall HR budget that they were allocated. They were expected to increase consistency across business units, to identify and deliver a more integrated corporate talent strategy. But most of the power in the companies we looked at rests with the line leaders, a theme we return to later.
of project-based work, in which high-potentials are encouraged to work together on strategic issues. Others described how they got involved in relocation, mobility, special training programmes and career counselling. Our interviewees spent 22% of their time managing training and development programmes. That strikes us as about right, given the 70 / 20 / 10 rule of thumb.
The systems in other companies are more complicated. One Head of Talent prepares an annual People Balance Sheet, bringing together all people metrics in the company and trying to link talent health to business strategy. Building on that approach, such a scorecard could include: head count (changes over time) rate of talent change (external/internal moves divided by headcount, attrition ratio at the top) talent mix analysis (potential against performance) proportion of new joiners to the entire employee group tenure in position or company, measured by year bands Several companies measure line managers on talent management activity; the resulting score figures in the managers bonus. The majority of the Heads of Talent we interviewed did not try to relate their talent measures to the companys financial output or share price performance. Rather, they focused on operational measures: completion of assessments, number of talent reviews done by line managers, participation in leadership development programmes, and ratio of external hires. As one of our interviewees commented: Its difficult and often meaningless to try to calculate ROI on talent initiatives. Instead, you need to look at what you are doing relative to your industry and competition and see whether its making a difference. Succession figured prominently in the metrics that several Heads of Talent employed. A Head of Talent explained: I have a clear picture in regard to external hiring numbers at the top level, and the impact of that on the business. I want to see around 10 internal appointments rather than hiring externally by Christmas. Its better to move people around, rather than to bring them in from outside. We are thinking of setting similar targets for 2012.
Heads of Talent see relationship building as being a key competency for their success
We asked Heads of Talent to identify the three key competencies that underpin success in the role. Some of the interviewees focused on technical skills and experience of HR processes and approaches but many identified relationship building, commercial acumen and internal awareness as top of their list. Our research suggests that a majority of our interviewees are strong in the relationship and associated influencing skills and have built deep and advisory-type relationships with their colleagues. But as we will discuss later, many have yet to fully develop and demonstrate the commercial acumen that would bring organisational buy-in and credibility. Other key competencies that were raised include: selfconfidence, resilience, strategic thinking, adaptability, customer orientation.
The CEO can see the value of our work in our leadership presentations, and now theres a waiting list for our development programmes. The CEO doesnt need convincing.
Standard
Good
Excellent
3 see Boris Groysberg, Chasing Stars (Princeton, 2010); Heidrick & Struggles and The Economist Intelligence Unit, The Global Talent Index Report: The Outlook to 2015
17 4 3
executives also appeared ad hoc and relatively infrequent. A number of interviewees talked of being around when the CEO or the EXCO were in town or of briefing the CEO before the annual talent update to the board. Those with direct reporting status or strong professional relationships with the CEO felt that visibility gave them an edge in dealing with some of the difficult senior talent issues they faced.
HR or business role
We also found ambiguity around the positioning of talent management, with many suggesting that sitting within the HR function impacted credibility and acceptance by the business. Interviewees told us that engagement was higher where they demonstrated commercial savvy and spoke business rather than HR language. The challenges we face are all internal. Theres a real ambivalence around talent here, the business is just not interested. Others felt that positioning talent in the HR function only served to confuse internal clients: If talent is everywhere and everyone has it whats the difference between Talent Management and HR? Finally having often been asked by the CEO to bring transparency to senior talent management processes, our respondents were surprised that the list of Hi-Pos (high potentials) was a closely guarded secret, sometimes even secret from those on the list. Executives in the top talent pool are critical to the success of the company, but their names are often not known except at the very top. In the next section, we explore ways in which Heads of Talent can learn to navigate this ambiguous environment.
4 for more on leadership without authority, see Ronald Heifetz, Leadership without Easy Answers (Harvard, 1998).
The challenges we face are all internal. Theres a real ambivalence around talent here, the business is just not interested.
Pressures
How immediate are the companys talent issues? Where are talent problems interfering with corporate performance? Where are the pain points that existing leaders (in HR, in the line, etc.) seem unable to address?
Purpose
Why has the company hired a Head of Talent? What are the problems that they are asking the manager to
5 The challenge of hiring and retaining women: An interview with the head of HR at eBay, McKinsey Quarterly, September 2008.
solve? Are they primarily about recruitment, retention, succession? The purpose of a Head of Talent will depend on many things: the companys culture and its traditions, the capabilities already present in HR, and the willingness and ability of line managers to act as talent managers themselves.
Pools
Finally, which talent pools will the Head of Talent manage? Some companies divide their pools; one large industrial company for example, has one talent manager for roughly the top 100 and another for the next 250. It is essential that everyone on the top team understands who falls into the Head of Talents portfolio, and what interaction he or she will have with them. Few of our interviewees had responsibility for external pools, a key source of ready now talent. We saw several Heads of Talent use this type of checklist to define the current position of their role and impact and set a plan for the future. In the appendix we offer a template for CEOs and Heads of Talent to use to review the current situation and future goals of their senior talent management strategy.
Person
What skills should the Head of Talent possess? What experience should he or she have? For example, a leading investment bank has regional talent leads (Europe, Asia, and North America) who dont have wholesale banking experience. But the CEO recently decided that the global Head of Talent needed to be deeply rooted in investment banking to facilitate easier communication with people at headquarters.
Profile
What internal and external profile should the talent manager maintain? Our interviewees emphasised the importance of getting around the company, meeting their portfolio executives in person. A CEO who wants such a broad internal profile for the Head of Talent will need to support the executive in gaining access to diaries, key internal business events and even some client facing meetings. The CEO and Head of Talent also need to agree on the right external profile. Some of the Heads of Talent we interviewed have relatively modest external profiles, but communicate widely within their companies.
Power
What decision making powers does the company want to invest in its Head of Talent? Will they have veto over senior hiring decisions? Over deployment of leaders in high potential pools? Where will the Head of Talent have to operate through persuasion and where through direct decision making?
Process
Where will the Head of Talent get involved in top executive processes and forums? To clarify, it is often a good idea to pose some challenging scenarios: for instance, suppose that the company wants to take over a smaller competitor. Will the Head of Talent be involved before the deal is agreed? Or will he or she read about it in the newspapers and then be told to help integrate top talent in both
and to build good relationships quickly. Many of our interviewees were quick to distinguish their roles from HR, feeling that not talking like HR gave them more credibility with line managers. All were aware that, in most cases, they were not the decision makers around hiring, retention or reward.
does this imply for these firms growth? How should talent risk impact an oil firms forward investment programme? It is easy for the Head of Talent, concerned with the executives they are responsible for, to develop an inward focus. We encourage Heads of Talent to look forward and outward, as well. The concerns of baby boomer and generation X executives are important, but the future of most companies rests with succeeding generations. These leaders have different views about work, communication and collaboration. A smart Head of Talent will get to know them and look carefully at their needs. The board of any company will be concerned both with implementation of its strategy and with risk to future performance and therefore, the CEO will also be so concerned. Focusing on these issues will help Heads of Talent keep their work directly relevant to the most pressing issues of the company. It will also keep the CEOs door open.
Conclusion
A new strategic talent discipline is emerging but there remains confusion about the nature, scope and real business impact of leadership talent professionals and functions. Our research suggests that this discipline is in an embryonic state, still developing, working hard to create credibility and traction in the organisation and with critical business leaders. However, the Heads of Talent we met are taking the lead in communicating their value and mission to the business and using their influencing and diplomatic skills to seed change amongst the top population of their companies. They see their role as longterm in nature, aligning business and talent imperatives, drivers of behavioural and cultural change from within. To help improve the focus and impact of these efforts we propose a simple and practical checklist style diagnostic (appendix 3). Our 7Ps (Pressure, Purpose, Person, Profile, Power, Process, and Pools) is intended to help CEOs and Heads of Talent to map out the gap between their long term aims and current reality. Our hope is that it will help create greater clarity around the strategic importance of this key business role and function. I need to make talent meaningful to my colleagues, one Head of Talent told us. We think that this is good advice for every Head of Talent. n
A total of 24 people participated in our on-line survey, all of them senior talent management professionals within FTSE 100 companies. To add further depth to these findings we conducted detailed interviews, either face to face or via telephone, with 20 of those respondents. Additionally, we leveraged Heidrick and Struggles network of senior talent executives to conduct more ad hoc and informal discussions around the themes we uncovered. The talent management professionals we spoke with represent a strong cross section of leading players and industry sector listed on the London Stock Exchange. The interviews and study were developed and produced by London based Heidrick & Struggles leadership consultants. We would like to thank all of the Heads of Talent for the time they have spent participating in the research.
Annabel Parsons Partner aparsons@heidrick.com Victor Prozesky Partner vprozesky@heidrick.com Caroline Vanovermeire Principal cvanovermeire@heidrick.com Dave Tullett Director Centre for Leadership Innovation dtullett@heidrick.com Rebecca Curran Associate Principal rcurran@heidrick.com Sarah de Corday-Long Associate Principal sdecordaylong@heidrick.com
What responsibilities do you encompass regarding the Top Population? (Select all that apply) (n=24)
25% 71% Compensation & Benefits Individual career management (promotions and rotations) 42% 58% 66% 91% 83% Mobility management Performance management (target setting, assessments) Recruitment (head-hunters, on boarding) Succession Planning (people reviews, etc) Training & Development (Corporate University, Development plans)
When did the Head of Talent (or closest equivalent) position first exist in your company? (n=24)
25% 25% 50% 02 years 25 years 5+ years
How many people do you have in your Top Population / Talent Pool? (n=24)
153 average Top Population
How would you rate your companys performance on talent management? (n=24)
Compensation & Benefits
13% 29% 50% 8% To be improved Standard Good Excellent
What was your career path prior to becoming Head of Talent? (n=24)
90% 10% HR other
Mobility management
42% 33% 25% 0% To be improved Standard Good Excellent
Performance management
17% 17% 66% 0% To be improved Standard Good Excellent
Recruitment
13% 33% 46% 8% To be improved Standard Good Excellent
Succession planning
13% 25% 50% 13% To be improved Standard Good Excellent
Purpose
What is the main focus of Head of Talent effort? Is it aligned with the key talent issues and the strategy?
Person
What skills and experience are critical to the role? Do these exist?
Profile
What is the internal and external impact of the role/ function? What brand promises exist?
Power
What are the decision rights held by Head of Talent?
Process
Where is Head of Talent involved in top executive processes and forums?
Pools
What is the size and definition of the talent pools? Is Head of Talent responsible for internal and external pools?
Heidrick & Struggles is the leadership advisory firm providing senior-level executive search and leadership consulting services. For almost 60 years, we have been building deep relationships with the worlds most talented individuals on behalf of the worlds most successful companies. Through the strategic acquisition, development, and retention of talent we help our clients from the most established market giants to the newest market disruptors build winning leadership teams. www.heidrick.com
Copyright 2012 Heidrick & Struggles International, Inc. All rights reserved. Reproduction without permission is prohibited. Trademarks and logos are copyrights of their respective owners. 201201JNTSEC73