Four Steps to Upgrade Talent from the Corner Office
From the Desk of the CEO is a regular series of posts from Tom Monahan, CEB’s Chairman and CEO.
Recently I commented in Businessweek about new Yahoo CEO Marissa Mayer’s focus on talent and noted that, to her credit, she put the attraction, retention and development of great people at the very core of her early agenda. Even if a talent focus sounds “fluffy” at first, there’s a powerful body of evidence that – particularly in fast-moving marketplaces with short innovation cycles – aggregation of talent is one of the more enduring sources of comparative advantage. In fact, when our research team looked at 56 years’ worth of performance data for every company that appeared in the Fortune 100, we found that talent-related issues – lack of bench, gaps in ability to innovate, poor organization decisions, etc. – account for nearly a third of performance stalls.
So Ms. Mayer (and other talent-first CEOs) has the facts on her side in placing caliber of talent at the center of strategic renewal; she just doesn’t have time on her side.
Like it or not, three major obstacles confront CEOs looking to pursue talent-first strategies: (1) they are slow; (2) most talent decisions are made outside the CEO’s office; and (3) talent is the most difficult corporate asset to track.
Upgrading a company’s talent asset takes years – at best – as hiring and development strategies kick in, and messages/priorities cascade through the culture. Even if Ms. Mayer were to clean house and seek to actively turn over the employee population, it would take (in the most of optimistic of circumstances) about seven years to accomplish this. Relative to other strategic levers – such as M&A – it pales in immediacy.
Perhaps even more troubling – is how little of a company’s talent agenda a CEO actually controls. A CEO can exert much more control over other forms of resource allocation, such as capital deployment or operations budgeting. Talent issues – by and large – are made outside the CEO’s office. In an average year, Yahoo might hire about 1,500 people and promote another 2,000. In the most aggressive scenario, were she to micromanage as many hiring decisions as she could, she could directly influence about 250—less than 20% of the overall talent flow into the organization.
Finally, talent is the most difficult asset to track. The most observable metrics are often close to useless (e.g. great retention metrics could tell us that we’ve become the Postal Service) and the most important are often too subjective (e.g. 1,000 different managers choosing their own definition of “high potential”).
So if talent matters (a lot) but the CEO can pull very few levers – and those that she can pull don’t necessarily link to outcomes that matter or drive change on a CEO-worthy timetable—what can a talent-focused CEO do?
There are four core steps CEOs can and should take to shorten time to impact of their talent initiatives which I’ll explore in depth in the coming weeks, including:
- Derive talent measures from business measures
- Permanently link talent planning into business planning
- Make your talent brand as visible as your end-market brand—and track performance against it
- Rebuild Board agendas around talent options
As we look across the executive suite and into the boardroom, we see too many companies that recognize that talent is their most important asset, but don’t yet manage it with the rigor of supply chains, partners or brands. Taken together, these steps enable a CEO to select, develop and deploy talent in ways that drives measurable business alpha – and establishes rigorous talent management as a core corporate discipline from the boardroom on down.
For more posts in the series, read:
- From the Desk of the CEO: On Britpop and Big Data
- From the Desk of the CEO: The Unseen Outcomes of the JP Morgan Chase Loss