Getting strategic about talent (Executive Series)

By Liz Bernier

It’s a phrase beloved by HR departments and motivational posters the world over: “Our people are our most valuable asset.” It’s also undoubtedly been the argument behind many an investment in training and development, better benefits packages and employee appreciation BBQs. 

But Michael Couch wants you to put all that aside for a minute. 

“Usually, people will tell you ‘People are your most important, most valuable asset…’ But I’m a little bit of a contrarian,” he said at a recent Strategic Capability Network event in Toronto. “This is blasphemy, typically, to an HR audience, but people are not your most valuable asset.”

In fact, people — no matter how talented or high-performing — actually come second to one other key consideration: Strategy. 

“To me, talent management has no value unless it drives strategy,” said Couch, who is president of Michael Couch and Associates in Pittsburgh. 

And that’s what Couch does — he helps to build strategy-capable organizations that can compete through their people. 

That’s not to suggest talent management isn’t important — it’s critical and there’s plenty of research to support that, said Couch. 

“There’s a lot of data out there — if you look at some great research done by the Institute for Corporate Productivity… they looked at high-performing organizations versus lower-performing organizations — in terms of revenue growth, market share, profitability and customer satisfaction — and found that (high-performing organizations) are two-and-a-half times better at performance management, they’re three times better at leadership development, and three-and-a-half times better at succession planning,” he said. 

But talent management has to connect to organizational strategy if it’s going to be effective, said Couch. 

“Without strategy, what we do has no relevance. And we also need to have an effective way that we look at and understand the capability of our talent and assess talent,” he said. “We’re looking at assessing talent, matching it against strategy and seeing what we’re doing at every level in the organization — not just the top.”

Every business has a different strategy, which comes with certain demands. But those demands are not the same for every employer — they can vary quite dramatically, said Couch. 

“So we need to understand what that translation of strategy and demand is,” he said. “With that, we can determine just exactly what kind of talent management levers we can pull, what we can do to drive strategy.” 

To do that, talent leaders need to understand the distinction between “putting people first” and having a concrete strategy that drives your talent management. 

“When somebody tells me that ‘We have a people-first strategy’ in the organization, that’s not a strategy. It’s doesn’t do anything to say how you’re going to compete in the markets, what markets you’re going to go after, those kinds of things,” he said. “From a talent leader standpoint, I think it’s very important for us to be business advocates first and people advocates second… this is the change we’re seeing right now.”

And it’s a change that’s critical for HR and talent leaders to be able to play a bigger and more impactful role in the overall business, said Couch.

“Once we’ve worked on strategy, it’s (about) translating strategy then into a picture of the organization in terms of, what are some of the critical roles and what are the critical competencies, the behaviours you need to drive?”

We also need to critically examine the talent processes themselves, said Couch. 

“They need to be aligned, integrated, and also they need to be differentiated,” he said. 

And finally, of course, we need to have effective metrics in place.

“If we don’t have measures or metrics associated with what we’re doing, then we’re not going to be able to show impactful progress.”

A critical consideration for connecting talent and strategy is determining which roles within the organization are “mission-critical,” said Couch. 

“Not all jobs are the same in an organization. They’re all important, but not all of them have the same impact on driving strategic results. There are roles — we call them the pivotal roles — that are the ‘A’ roles. They have a direct strategic impact,” he said. 

“There are some roles I like to refer to as sort of ‘enabling’ kinds of roles. They have an indirect strategic impact, they support growth and value creation, they often support an enabling process within an organization. And then we also have roles that are business assessing.”

This is not to suggest some jobs are not important — they’re all important or we wouldn’t have them, he said. 

“But, from our standpoint, we need to know which ones have a critical strategic value. And then we need to change and refocus and approach our business in a way to be able to address that.”

There are some roles where, over time, differences in performance don’t have that dramatic an impact on the bottom line — whereas there are other roles, such as sales, where performance can have a significant and direct impact on the bottom line. 

“From a talent leader standpoint, we have to know this, we have to know who’s in these roles, we have to really emphasize how we go about building and training and developing these people,” he said. 

Yet assessing roles as A, B and C roles is not a line of thinking HR typically follows, he said. 

“When you ask this in your planning process — ‘Which roles should we really be thinking about that are going to help us drive our strategy?’ — that’s not the kind of question that HR often asks,” he said. “(But) there are certain assets that will give you a greater return if you invest in them.”

At Google, for instance, there are specific instances where the company can trace back millions of dollars in revenue to one innovative idea that one person had. 

“They go out of their way to find these people for critical roles,” said Couch. “If we know these mission-critical processes and roles, and we know the capabilities of our talent, then we know where we should invest them to drive value.”

It’s not always an easy discussion to have, but it’s crucial to remaining competitive. 

HR and talent leaders also need to consider what leadership behaviours and skills they want to see that will help drive strategy. 

“If we don’t get the competencies right, the rest almost doesn’t matter. That means we aren’t going to be making the right talent decisions to be able to help drive strategy,” he said. “If we don’t use the same set of competencies across selection, development, performance management, promotion, talent assessment, then we’re going to have a confused mess. So the competencies can be a way to integrate all of our processes so it’s driving towards the same thing.”

By Trish Maguire 

For any organization aspiring to achieve a best business strategy for growth, is it not in HR’s best interest to ensure the best talent are placed in key roles? 

However, Michael Couch reasons this may not be so. He suggests HR is not necessarily: determining key or “pivotal” roles; effectively verifying best talent; and aligning talent with business strategy. 

Could it be that in the call for HR to transform itself, there has been an overemphasis on systems and processes? Is it possible the HR function in strategic workforce planning has become an exercise in defining resource requirements based on yesterday’s data, maintaining all-purpose job descriptions, processing standardized performance management systems and administering normal distribution compensation models? Has the drive toward reducing costs and improving operational effectiveness through HR system and process improvements missed the quintessential dynamics behind enhancing business strategy?

The consistent message from experts such as Huselid, Becker and Beatty, Boudreau and Urlich is that executing HR strategies “the way we’ve always done it” is just not sufficient for today’s complexity. Similarly, Josh Bersin of Bersin by Deloitte questions whether HR is spending too much time managing predetermined succession plans and short-range job descriptions with conventional job evaluation processes and uniform performance management practices.  

Additional food for thought can be found in the 2015 Deloitte Global Human Capital Trends 2015 study, which involved more than 3,000 respondents from more than 100 countries. It found 80 per cent of companies believe HR skills remain a challenge and 39 per cent rate this problem as urgent. 

A critical premise in Huselid, Becker & Beatty’s Differentiated Workforce concept is the need to stop treating every employee the same and start valuing his individual contribution and talents. This hypothesis is reinforced by Ernest O’Boyle and Herman Aguinis’ extensive research, conducted across various industries and occupational jobs (The Best and the Rest: Revisiting the Norm of Normality of Individual Performance; Personnel Psychology). 

Their conclusions unquestionably undermine several traditional human resource and core organizational behaviour principles. Moreover, they challenge existing selection, performance management, job classification, compensation policies and succession planning practices.  

Unquestionably, HR practices are not only about filling organizational needs — they are about achieving business strategy with a talented, valued workforce.  The question is “What is HR doing about it?” Despite Bersin championing the need for HR to “be bold,” adopting a differentiated workforce may be a major challenge for any leader, not just HR leaders. 

Redesigning talent management strategies to build a differentiated workforce is not the function of HR alone. To be truly effective, it needs a high level of collaboration and input, from the CEO to front-line managers. The challenge for HR will be in defining a viable business case. 

Imagine the measurable difference an organic, holistic and integrated talent management model that systematically complements your organization’s business strategy, such as the differentiated workforce, could have on your organization’s long-term growth and profitability.  

By Morgan Smyth 

An organization, whether it’s in the business of building houses or building smartphone apps, running a transportation company or running a school board, must have clarity of purpose — a clear explanation of its value. To achieve this, it must have a solid strategy — a clear plan showing how it will achieve that value.

In order to convincingly execute on this strategy, it must also have the right people. 

Michael Couch refines this last part even further by stating an organization’s most valuable asset is having “People with the right skills in the right roles doing the right things at the right cost.”

He also claims an organization’s strategy is more valuable than its people because strategy is the framework that guides the choices that determine the nature and direction of the organization, including what kind of people are needed. Talent management has no value unless it drives strategy. So it’s strategy first, people second.  He calls this concept “Competing through people.”

Make sense? Of course it does, yet very few organizations are successful at achieving this. Why? Because we live in a different world now and organizations just haven’t kept up with the times.

Managers came into vogue back in the industrial era when managing a relatively steady-state environment, such as running a production line, was important — the Peter Drucker days.

We have since transitioned into the much more dynamic, uncharted “knowledge” era where most industrial jobs have been either handed over to robots or outsourced to other countries. Flat organizational structures are replacing the outdated hierarchical model. Weekly “calibration” meetings are supplanting the traditional annual performance reviews.

By asking the question “Where does our strategy require talent that will make us better than our competition?” organizations can hire talent that fits more suitably into their strategy, rather than into their culture. They no longer need brawn; they need brains.

However, managing brains is significantly more complex.

Each industry is unique; each organization within an industry is unique; each employee within the organization is unique; and each role is unique. Therefore, each individual has to be trained and nurtured in a unique way. How can management do this and yet remain equitable to all? It cannot.

Each employee’s role must provide value. But not all employees contribute the same amount of value. For instance, an employee responsible for mergers and acquisitions may be considered more valuable than one responsible for purchasing office supplies. How much more valuable? Well, this is up to the senior executive team to determine. It must quantify the strategic value each person provides and what his potential value may be in the foreseeable future.

This assessment, once completed, determines who gets the royal jelly — who is given more grooming, more support and more opportunities to grow and advance. 

Some companies such as Google and Facebook use the “hire slow, fire fast” approach.  This is where the “new” management comes in. In order to manage this new knowledge-based talent pool effectively, it takes a new kind of manager at all levels. She must be one who can articulate the organization’s purpose and strategy. She must paint the picture (the vision), inspire the team, motivate and guide each member in the development of his skills and talents. In essence, the traditional manager’s role has to change. Now she has to become both a leader and a coach. Being just a manager is not enough.

One way to get managers to focus more on the leading and coaching aspects of their jobs would be to remove the word “manager” from their titles. Insert leader or coach instead. And, just like the coach of a hockey team, this new business coach must map out the season’s strategy, pick the right players; evaluate each player’s potential; assign them to the right positions; and develop their skills to maximize their respective potentials — with the sole purpose of winning the cup.

By Karen Gorsline 

When it comes to discussions around people and strategy, commonly used phrases include capability, culture, competency and talent management. But often there is a lack of clarity on what these phrases mean. This lack of clarity can create confusion when organizations then attempt to link strategy to people management. Below are some thoughts and questions that may be helpful in navigating the maze.

Strategy comes before people. While a strategy may evolve over time to leverage the talents of a workforce, the core components of mission, vision, values and value proposition are the foundation of an organization. Are people, internal or external to the organization, clear on what the organization is about? Do functional strategies reflect the direction of the organization? And, if not, why not?

Capabilities can be executed to support success. These may be specific to one functional area or may require the ability to co-ordinate across two or more areas for a specific result. What are the organization’s strategic capabilities? What must it excel at for success and sustainable growth?

Does development of an identified capability reside primarily in one functional strategy or is it across functional strategies? If more than one, how are these co-ordinated and what are the synergies created?

Culture is “how” an organization operates. It reflects the real values of the organization, which may or may not align with the stated values. Culture supports strategy and capabilities by providing an environment where such things as information sharing and teamwork, drive for success or tolerance for highly variable behaviour are considered the norm. Culture, to the extent it is specific and required for success of the strategy, may in fact be a capability. For example, where technological innovation is critical to the organization’s success and sustainability.

Does the culture reflect the values or are the values just something posted on the wall? What is the real evidence to support that? Is the evidence consistent, measurable and pervasive or anecdotal? Are there easily understood linkages between mission, vision, strategy and culture?

Competency is probably the most misunderstood term of all. Depending on its usage, competency can refer to a technical proficiency or skill, an attribute such as empathy or drive for results, a specific type of behaviour such as listening or influence, or a cluster of different skills and behaviours with a specific focus like meeting customer needs or managing projects. Each meaning is valid and not mutually exclusive as competencies may build on each other or be combined. 

There may be confusion about which competencies apply across the organization and which are affiliated with a specific role. Often those that go across the organization relate to values and culture or to leadership. In addition, there are critical roles where specific competencies are directly related to success and results in the role.

How does the organization use the phrase competency? If there are multiple usages of the phrase, is it clear and understood how the different types of competencies work together?

What competencies apply across the organization — to all roles? Are there too many to be realistic? Which ones really restate a value and are table stakes to being part of the organization? Which ones relate to driving a specific culture? 

Which ones primarily apply to managers and leaders? What are the critical roles for the organization? Are the competencies contributing to high performance in each role understood?

Talent management is not a single process. Talent management is an umbrella that includes analysis of the fit of the workforce to meet strategy, identification of critical roles and competencies, recruiting and staffing approaches to build the workforce, assessment and development processes for talent within the organization, deployment and re-deployment strategies for flexibility or mobility, and thoughtful, effective exit strategies for poor fit in the organization. 

Is the organization managing talent in a comprehensive way aligned to its overall business strategy? What are the key HR processes in place and which ones need to be developed or rethought? Do the various approaches and processes, individually and in combination, contribute to: development of the desired culture, demonstration of values, and delivery of the organization’s strategy and value proposition?

The critical point is to be clear about what each of these mean and how they relate to each other to reduce confusion and increase focus on moving the organization along its business strategy.