The three principles of an adaptive and integrated talent management strategy.
People & Change Perspective
“You need to be a better leader next year than you were the year before, I think you’ve got to keep aspiring to be better, learn, change (and) modify your approach given the circumstances.” – Doug Baker, CEO of Ecolab
When Doug Baker took over as the CEO of Ecolab, an industrial cleaning products company, in 2004, he set sights on tripling the company’s $4 billion revenue. In pursuit of that goal, Baker completed some 50 acquisitions over 10 years, growing sales to $14 billion and doubling Ecolab’s workforce by 2014.1
The acquisitions allowed Ecolab to offer its customers a more diverse set of cleaning products and services, but as the company’s sales grew, so did organizational complexity. Management layers multiplied, leadership became increasingly siloed, and key decisionmakers spent less time interacting with customers. The way Ecolab did business had changed, but the way its workforce was organized and managed had not.
Baker firmly believed that a customer-centric focus was critical to meeting the company’s ambitious revenue targets, so he adopted an integrated approach that put the customer experience at the center of workforce strategies. He designed a system which empowered more decision-making on the front line, training the employees that were closest to the customer to provide customized solutions faster. As front-line employees were incentivized and empowered to own customer relationships, senior management was allowed to focus on broader customer experience initiatives.
This shift took time, and the transformation process had to be assessed, tweaked, and redeployed with each new acquisition. But it has proven successful. Ecolab’s Fortune 500 ranking has risen from 451 in 2004 to 211 in 2017, and the company’s shares have more than quadrupled during Baker’s 12-year tenure. Yet Baker understood that what worked this year may not work the next.
“You need to be a better leader next year than you were the year before,” he told Fortune in 2016. “I think you’ve got to keep aspiring to be better, learn, change, [and] modify your approach given the circumstances.” 2
Today, business survival is increasingly dependent on an ability to evolve, adjust, and transform with agility. Organizations are entering new markets, launching new products, and transforming their operating models at a pace that would have seemed unfathomable just 20 years ago. An ability to adapt is a matter of survival. One must disrupt or be disrupted in today’s rapidly evolving market.
In addition to thinking big, organizations must also narrow the lens, focus on the near-term, and build an agile strategy that can be implemented, tested, and adjusted for continuous improvement. Talent management organizations don’t have time to play catch-up on outdated siloed strategies, and they can’t afford to blindly adopt the talent management trend du jour—anything from chasing a “Best Place to Work” title to purchasing a new technology—without first evaluating the impact on the broader enterprise.
In this piece, we discuss how talent management organizations can adopt an agile, cross-organizational approach by first weeding through fads to identify impactful shifts and opportunities, and then applying those findings to inform three core principles of a disruption-proof strategy. These are the first steps toward the development of talent management organizations that are truly capable of delivering on broader organizational objectives, and these are the foundational principles of a strategy that is as malleable and nimble as the market itself.
Avoiding the Frenzy of Fads
Identifying what is truly most important to an organization’s talent management strategy is becoming increasingly difficult. It is easy to be distracted by the latest-and-greatest talent management trends, many of which conflict with a sustainable talent management strategy.
Today’s talent management leaders must adopt a methodology for identifying and assessing fads from real industry drivers. An ability to strategically use those insights to assess, test, and adopt impactful solutions is a core competency that these leaders must possess.
Fads, which may be detrimental to an organization if considered in isolation, include the following:
The “Best Place to Work” mentality
- Why organizations should be cautious: Misplaced focus
- Being a “Best Place to Work” may not mean that the employees are truly satisfied, planning to stay at the company, or dedicating discretionary effort to their work. Focusing exclusively on title-chasing may unintentionally distract from strategies that contribute to employee satisfaction and performance.
New or emerging HR technology
- Why organizations should be cautious: Lost influence
- HR technology should be viewed as an enabler rather than a driver of organizational talent decisions. Sometimes organizations purchase a technology platform before fully understanding their requirements, and are left scrambling to fit their talent strategy into the limitations of their technology platform.
Investing big in learning and development
- Why organizations should be cautious: Training with no Return on Investment (ROI)
- More than ever before, employees expect development and training as part of their job experience. Millennials fundamentally think about jobs as opportunities to learn and grow, with 59 percent citing training and development as extremely important to them when applying for a job.3 But making investments in training and development simply to follow suit with competitors— without first estimating the expected impact on the business’s needs—may not produce ROI.4 Furthermore, without consideration of how learning and development influences other talent management levers, the organization may actually be training employees for their next job.
Contrary to the above, impactful talent trends, like the ones outlined below, should be considered as foundational elements of an organizational strategy. But because the talent marketplace and its industry drivers are increasingly dynamic and continuously evolving, that strategy must be built to be agile, adaptable, and integrated within a framework that can be periodically refreshed with minimal expenditure of resources.
These industry drivers rise above fad status, and when incorporated into an organization’s talent management strategy, support an infrastructure that can adapt with agility to new opportunities and business objectives:
Consolidation of talent management platforms and human capital technology
- Why it’s impactful: Greater integration, boosted functionality, lower costs
- Industry consolidation of integrated talent management platforms and human capital technology is likely to continue into the foreseeable future, and for good reason: Integrated platforms offer enhanced reporting and analytics capabilities as well as opportunities for organizations to negotiate lower-cost contracts with a single vendor. These same vendors continuously seek new opportunities to provide integrated talent management software to support the full employment life cycle. Examples of this consolidation include Oracle‘s acquisition of Taleo, SAP’s acquisition of SuccessFactors, ADP’s introduction of its Learning Management System, and IBM’s acquisition of Kenexa.
Informal talent management practices
- Why it’s impactful: Improved employee experience and performance
- Employees desire more frequent and informal coaching and performance conversations, so organizations are developing more community-based, relationship-based, and responsive “just-in-time” talent management strategies. Some organizations have taken this to the extreme with the elimination of formal performance management altogether. In addition to meeting employees’ desire for a less formal talent management approach, this trend better supports changes to the nature of work in general. It’s agile, freeflowing, and reduces wasted energy and lost productivity.
Evolving talent demographics
- Why it’s impactful: More diversity, more innovation
- Evolving talent demographics and workforce needs—such as the transient nature of workers, the evolving “employee contract,” which includes work-life balance expectations, and the shift to project-based delivery or “gig economy”—drive new and evolving workforce plans and workforce composition. This workforce diversity has been proven to drive more innovative outputs and contribute to an improved employee experience.
- However, organizations should proceed with caution. Contract or part-time employees may be less expensive in the short term, but without a robust knowledge-management system to capture and retain institutional knowledge, gig workers may take valuable knowledge with them and leave the business with widespread knowledge gaps. In addition to instituting a knowledge-management system, organizations should create a process to analyze current FTE resources— including baby boomers who want to stay in the workforce—who may be trained and transferred to meet quick-turn, short-term opportunities.
The Three Principles of an Adaptive, Integrated Talent Management Strategy
If your organization hasn’t considered holistic talent trends and may see signs of falling victim to fads within the industry, it is a good time to revisit your talent management strategy. The incorporation of these industry drivers and wariness of fads fundamentally move an organization’s strategic development process away from a “set and forget” mindset to one that embraces continuous improvement and agility.
In order to make this move while maintaining a laser focus on delivering value to the organization, the following principles are key:
Principle 1: Enlist a leadership sponsor that has an enterprise-wide purview to stay aligned with the organization’s vision, objectives, and path forward.
A leader that understands the interdependencies and enterprise-wide implications of a talent management strategy is critical to effective implementation and sustained value generation. An ideal sponsor should ensure an alignment of expectations, goals, and vision amongst leadership across the organization well before the talent management strategy development begins. From there, strategy development must go beyond fixing the gaps in the Employee Talent Life Cycle and coordinate with the strategies of the broader business and operations—particularly finance, operations, and IT.
Principle 2: Capture and incubate best practices pioneered in the field—the front line for talent identification, coaching, and retention—to be scaled and deployed across the organization.
Human resources may be the coach of a talent management program, but first-line and middle managers are critical players in the successful implementation of the program. Developing a strategic feedback loop with the first line and middle managers is key to driving agile, continuous improvement. The feedback loop should include a platform for identifying the grassroots solutions and processes being developed in the field, plus a way to test and scale those innovations for enterprise-wide application. Testing must prove that these innovations drive quantitative success by improving factors such as pipeline health, retention rates, net inflows and outflows from key geographies, and cost of development versus strategic hires.
Principle 3: Narrow the lens and build a strategy that can be implemented and tested to meet short-term needs throughout the enterprise.
It is unwise to create a talent management strategy that’s built to last three to five years when the dynamic talent market is changing every six to 12 months.
Shorten the horizon and adopt an agile approach wherein projects are implemented, tested, and refined every few months. Focus on incremental, strategically placed bets by prioritizing projects that will deliver the greatest value against the all-up business objectives and those that will help talent management learn and grow faster. Then capitalize on project success to foster support and engagement with leadership across the organization. This is how an agile foundation is built and how talent management organizations are able to incrementally grow their influence and impact.
For the Business, With the Business
The effectiveness of an organization’s talent management strategy reaches far beyond the talent and HR organization. The strategy that drives those outcomes should also go beyond these organizations. Talent management must become more agile, nimble, and integrated so it can significantly contribute to the bottom line. Likewise, the pitfalls of working within an HR silo and chasing talent fads have the potential to do great damage to any organization.
While rapid shifts in the talent landscape are main drivers for an organizational refresh of talent management strategy, being able to identify and base decisions on impactful shifts in talent marketplace—both internally and externally—is critical. Talent management leaders must then take that knowledge and engage the rest of the business as strategic partners, aligning organizational goals and vision to the talent management strategy. Then they must shorten their strategic horizon by testing and refining projects that are prioritized by those that will potentially provide the greatest all-up business value.
It’s an approach that is agile, adaptive, and integrated for a disruption-proof talent management strategy that supports—and is supported by—the organization in ways that position talent management and the business as a whole for sustainable long-term success.
1. “Culture Is Not the Culprit,” Harvard Business Review, April 2016. 2. “Ecolab’s CEO Says Responsible Leaders Take Big Risks,” Fortune, Dec. 6, 2016. 3. “How Millennials Want to Work and Live,” Gallup, June 30, 2016. 4. “The New Talent Landscape: Recruiting Difficulty and Skills Shortage,” Society for Human Resources Management, 2016.