Talent Managers must master organisational performance.
The reason many organisations are not seeing a shift on their bottom line is that they have an inability to attract, engage and retain top talent with the aim of business objectives. On the other hand, many talent management professionals are still scratching their heads as to how they measure the effectiveness of talent they bring into the organisation and most importantly how they ensure that talent is fully mobilised to achieve business results. Leadership is at the centre of it all, they need to get the best out of talent. They are value enablers – they need to make sure that value activators (employees) are fully enabled and supported to add value to the business.
However, their biggest challenge is that they are unable to mobilise talent effectively due to a lack of certain skills and behaviours. Whether the department or unit is performing or not performing, the leader is the one who is steering the ship, he or she can steer it in the right or wrong direction, hence I say leaders are in the centre of it all. Until organisations and HR departments invest in leadership development to close these gaps, the efforts of Talent Management will be seen as flawed.
The conventional performance management system alone will not be able to measure organisational performance. The current performance management system including reward structures may possibly be rewarding dysfunctional behaviours that don’t necessarily contribute to the bottom line of the business. It’s about time we reinvent how we manage organisational performance including management of talent so that we can see the value of talent we bring into the organisation.
Talent management costs vs revenue
Other departments in the organisation have been viewed as efficient, strategic and having a positive impact on the organisation’s bottom line. Talent management professionals are however unable to demonstrate this to the organisation. It’s about time talent management professionals demonstrated to business that they are not only managing processes. They need to start focusing on economic, scientific and statistical approaches to clearly prove the revenue impact based on talent management initiatives initiated. Talent management professionals in conjunction with leaders need to mobilise talent with the aim of achieving economic value add which includes shareholder returns and cash-flow-return-on-investment. That’s what organisational performance management is all about! Shareholders of any business are expecting the organisation to generate shareholder value over and above the cost of resources used (cost of capital) or even capital investment.
Value based management is one of the tools that can be introduced which aims at focusing on maximising shareholder value and ultimately increases shareholder value, it is simple, and it’s all about economic value add which really means net operating profits after taxes minus a charge of the opportunity cost of capital invested by any organisation. The biggest question now is how well talent management professionals can assist organisations to translate financial objectives into behaviours required in the organisation to see positive bottom line results.
Solid organisational performance management is something that hasn’t been done well by HR professionals. They need to have strong business acumen and good financial skills in order for them to master organisational performance management. Now that’s a combination of skills we don’t often find amongst some our HR professional.
This growing problem in managing the essence of organisational performance is underpinned by a number of fundamental talent management activities, rewards management, leadership development and processes that needs to be developed, executed and managed internally by the HR professionals including talent management professionals. It is of utmost importance that talent management professionals also study the external environment and see how it impacts its talent management agenda internally. The external environment is becoming increasingly competitive and requires a great shift in talent management, leadership, rewards management and solid organisational performance management.
Overcoming the business challenge
Now let’s look at a number of essentials within organisational performance management we can look at in overcoming this business challenge. See Figure 1.
a) OP1: Transparent Business Strategy
b) OP2: Objectives and alignment
c) OP3: Talent Engagement and enablement
d) OP4: Listen to the voice of Talent
e) OP5: Managing Organisational Performance
OP1: Transparent Business Strategy
Every organisation is identified by its vision, mission, business strategy, values, leadership and its corporate brand. This is where the story is told, a place that differentiates the organisation from its participants in the market. Without these five key elements (vision, mission, business strategy, values, corporate brand and leadership) the organisation will have no meaning to its employees and the public in general. Leadership is sitting at the centre of it all. Leaders of the organisation are the value enablers, enabling its employees (value activators) to achieve business results. The role of talent management professionals here is to understand how business strategy can be mapped with existing talent in the organisation and most importantly if there are gaps, this is where talent mapping takes place. Talent management professionals must demonstrate to business whether the organisation can achieve its business strategy or not, looking at the existing talent.
OP2: Objectives and alignment
Organisations and their executives are concerned about their direct revenue which then entails economic value add, that is, cash-flow-return-on-investment, cost of capital, and increase in sales or market share, brand equity, profit margins and shareholder value. On the other side, there are a number of business impact factors talking to revenue impact that executives are also concerned about. We need to unpack factors that will impact the revenue positively so, like product or service innovation, new product development, customer satisfaction and retention rates, quality of the product, customer experience programmes and customer relationship management, which aim at customer retention to avoid a loss in the market share. We also recognise the depending on the nature of the organisation these performance indicators or revenue impact factors will be different.
Now all this could be a language that some talent management professionals don’t understand, It is very important that talent management professionals understand broad categories of business impacts (revenue impact and direct revenue factors). It is true that, if you don’t have the right talent in the right positions, you will not be able to achieve business results you are hoping for. The talent management professionals should be able to assess whether they have the right talent in place to be able to meet these business objectives and strategy and, again, talent mapping also plays a huge role in this exercise. Remember that talent management professionals are responsible for process and leadership is responsible for the content. Strong strategic partnerships with leaders is critical so that we assess and map current talent with the strategy or business objectives of the organisation.
OP3: Talent engagement and enablement
I have heard many people saying employees are the greatest assets of any organisation. I strongly believe in this. The Economic Value Add all starts with creating good Employee Experience. Then employees will become brand ambassadors and then brand ambassadors will create “customer experience” and in the end this will lead to Economic Value Add and Shareholder Value. Many organisations are not getting the order right. That’s why they will not see the return on investment based on capital investment. The focus should start with creating employee experience programmes and leadership effectiveness is quite important. A good investment in leadership programmes is important. Leaders create the inspiring climate for value activators (talent), and they need to listen to the voice of talent, recognise, develop and most importantly reward. Take note that serious partnership with talent management professionals is critical and cannot be ignored.
Often we find someone who is promoted to a leadership position because they are technically sound. However this doesn’t mean that he or she will be able to lead a team or department, often people who are promoted because of their technical expertise turn out to be autocratic and less participative and that might possibly kill team morale. Ultimately employees will be disengaged because they are feeling unvalued and disempowered. So the leadership effectiveness analysis and 360 degree assessment will assist talent management professionals to see where the gaps are and they will need to be closed through a number of leadership development methodologies.
OP4: Listen to the voice of talent
Again, leadership style plays a crucial role here and managers must start to listen to the voice of talent through a number of platforms depending on organisations, like one-on-one engagements, team meetings, workplace forums and departmental business review meetings. These kinds of platforms will help to measure where individuals and teams are in terms of performance. What is more important is that this is the platform to solve workplace issues and things that are seen as roadblocks to the performance of the business. Gone are those days when departmental meetings are turned into “feeding schemes” or “tea parties”. The leaders are at the centre of it all. They need to structure every meeting, talk about business objectives, key performance indicators, roadblocks and most importantly support structure the team requires.
Now when it comes to talent management professionals, they need to play a role of a process owner measuring the effectiveness of OP4 (Listen to the voice of talent). Talent reviews are often executed in conjunction with performance reviews in many organisations. The type of talent management activity (talent reviews) is important when it comes to talent retention and also determining where each employee (talent) sits on the talent grid. When it comes to talent retention, leaders are in the middle of it all. If leaders are not well equipped in talent retention and they don’t listen to the voice of talent, you are in trouble. Top talent drives business performance, so leaders must start to listen to the voice of talent to minimise talent turnover. HR is not responsible for this, but leaders are responsible for the content that drives the process for which HR is responsible.
OP5: Managing organisational performance
This is a very important pillar within organisational performance management. We need to see whether we achieved what we set out to achieve in the beginning of the financial year. Often other organisations have balanced scorecards and performance dashboards which include things that the executives and the CEO are interested in at an organisational level and also at divisional or departmental level.
At a departmental level, this is done through a number of channels like a performance appraisal system in a form of one-on-one between the line manager and the employees. One thing talent management professionals overlook is seeing how the talent they brought into the organisation through talent acquisition has made a positive contribution to the business. For example, if someone is hired as a sales rep and one of his or her objectives is to increase market share by acquiring more customers, did he or she deliver what was expected? Did we as talent management professionals indirectly so impact on the bottom line of the business? This is one area where some of the talent management professionals are lacking and they are unable to demonstrate this to the business. Talent acquisition is not the only way to measure this. Talent management professionals can also establish how well the talent mobilising programmes they introduced to the business have impacted on the bottom line of the business.
Talent management professionals suffer low corporate status and recognition because they lack understanding of the effective ways to prove impact on revenue to executives based on talent management initiatives they introduced in the organisation. In order for talent management professionals to master organisational performance management and gain corporate status and recognition in the organisation, they need to have strong talent management expertise accompanied by strong business and financial acumen. Now that’s a combination of skills we don’t often find!
On the other hand, implementing solid value based management in the organisation requires a culture change, organisational re-engineering and leadership effectiveness programmes. A project team called (VBM team) is required. This is a team that consists of not only HR professionals but other professionals in the organisation. A commitment from the seniors and CEO is required. I don’t think there will be a CEO who will say, “No,” to the introduction of value based management. The value based management team should focus on the pillars of organisational performance management like transparent business strategy, objectives and alignment, talent engagement and enablement, listening to the voice of talent and managing organisational performance. A well-seasoned organisational performance manager is critical for the success of value based management. This individual will be accountable to build the foundation, processes, framework and programmes, and implement, monitor and drive the organisational performance management agenda. This particular individual can report to the HR Director or Executive, and must have a very close relationship with the talent management professional, Finance Director and CEO. Depending on the organisation, you can still combine talent management and organisational performance functions together.
Patrick Thabo Kheswa is the Capacity Building Manager at Rand Water, www.randwater.co.za. He is a Lecturer in Branding and Marketing at Vega School of Brand Leadership, an Executive Coach, a business advisor, MC, public speaker and talent management expert.
This article appeared in the December 2015 issue of HR Future magazine.