How do you identify critical talent?

Organizations need better analytics to effectively drive talent strategies

By Claudine Kapel

A lot of organizations talk about the importance of attracting and retaining critical talent, especially since accessing such talent is expected to become more challenging in the coming years.

But many companies are still grappling with just how best to tackle the subject – or how to even identify what talent is actually critical.

A recent survey by Mercer found while nearly two-thirds (64 per cent) of respondents reported that managing critical talent is vital to the execution of their business and talent strategies, less than one-third (30 per cent) rated their critical talent programs as being extremely effective.

The survey results reflect responses from 124 organizations in Canada and the United States.

“As the economy cautiously rebounds, global investment in talent is rising and leaders recognize that talent is an essential element of every core business function,” says Mercer. “Yet, many leaders still cite the lack of adequate talent pipelines among their most critical business challenges.”

On the positive side, Mercer found 78 per cent of respondents have processes to identify critical talent. Some respondents defined up to 20 per cent of their workforce as critical, with two to five per cent being the most common target for defining critical talent.

The criteria used to identify critical talent included:

  • High potentials (73 per cent)
  • High performers (62 per cent)
  • Hot jobs (46 per cent)
  • Organizational hierarchy (41 per cent)
  • Job family or function (38 per cent)
  • Competencies (28 per cent).

Of respondents that define critical talent as hot jobs or by job family or function, the most frequently cited jobs and job families considered critical include:

  • Compliance
  • Engineering
  • Finance
  • Human Resources
  • Information Technology
  • Sales
  • Management (senior and middle tiers).

Although survey respondents saw their talent programs as being strategically important, Mercer says its research suggests organizations are missing out on opportunities to make the most of these programs. For example:

  • Only 49 per cent notify critical talent of their status
  • Only 34 per cent track critical talent status in their HR systems
  • Some 33 per cent do not forecast critical talent needs.

But Mercer suggests organizations are starting to ask the right kinds of questions about their critical talent including:

  • What specific talent groups will be necessary to achieve strategic business goals?
  • What new kinds of talent will be needed?
  • What’s changing about our workforce demographics and what is the impact on the business?
  • How strong is our “bench”? As we compare the current workforce to future needs, where are the gaps in the talent pipeline?

There are a number of reasons why organizations may be struggling with the notion of critical talent.

The most obvious challenge is that “critical talent” means different things to different people – even to those on the same leadership team. And when you layer the need to articulate what kind of talent may be needed in the future, establishing a consensus view becomes all the more challenging.

Interestingly, some 41 per cent of the Mercer survey respondents said they define critical talent in terms of organizational hierarchy – with 47 per cent of these respondents defining critical talent as roles at the director level and above.

If an organization really wants to develop a meaningful strategy around critical talent, they need to get more specific about what kinds of skills and talent are most vital to continued business success. By getting the analysis down to specific jobs or people, an organization is better positioned to develop meaningful strategies for retaining and engaging such talent – as well as to more effectively tackle workforce planning and succession planning.

High-level or generic analysis – such as defining every senior management role as representing critical talent – isn’t sufficiently granular to support meaningful action planning. Broad definitions can also translate into higher costs if an organization seeks to implement special programs that specifically target critical talent.

Organizations that want a competitive edge when it comes to attracting and retaining talent need to engage in deeper analytics about their and future talent needs. They also need a clear plan defining the steps they’ll take to ensure they have continued access to the talent they need. That includes defining what communication to such talent will look like – and what the organization will do to continue to retain and engage everyone else.

While the devil may be in the details, so are the benefits of asking the tough-to-answer questions about an organization’s talent needs.

© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.

Claudine Kapel

Claudine Kapel is principal of Kapel and Associates Inc., a human resources consulting firm specializing in compensation design, performance management, and employee communications. Claudine is also the co-author of The HR Manager’s Guide to Total Rewards and Straight Talk on Managing Human Resources.
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